Investing in the Future of Jobs and Skills by jennyyingdi

VIEWS: 14 PAGES: 163

									 Investing in the Future of Jobs and Skills
Scenarios, implications and options in anticipation
     of future skills and knowledge needs


                   Sector Report
      Computer, Electronic and Optical Products




Authors:
Dr. F. van der Zee (TNO Innovation and Environment)
A. van der Giessen (TNO Information and Communication Technology)
S. van der Molen (TNO Innovation Policy Group)
S. de Munck (TNO Information and Communication Technology)
D. Maier (ZSI Centre for Social Innovation)
Submitted to the European Commission, DG Employment, Social Affairs
and Equal Opportunities

Executed by:

TNO Netherlands Organisation for Applied Scientific Research
SEOR Erasmus University Rotterdam
ZSI Centre for Social Innovation

May 2009

DG EMPL project VC/2007/0866
Lot 7, Computer, Electronic and Optical Products
This report is published as part of a series of forward-looking sector studies on New
Skills and New Jobs in the frame of the project Comprehensive Sectoral Analysis of
Emerging Competences and Economic Activities in the European Union.

This publication is commissioned under the European Community Programme for
Employment and Social Solidarity - PROGRESS (2007-2013).

This programme is managed by the Directorate-General for Employment, social
affairs and equal opportunities of the European Commission. It was established to
financially support the implementation of the objectives of the European Union in the
employment and social affairs area, as set out in the Social Agenda, and thereby
contribute to the achievement of the Lisbon Strategy goals in these fields.

The seven-year Programme targets all stakeholders who can help shape the
development of appropriate and effective employment and social legislation and
policies, across the EU-27, EFTA-EEA and EU candidate and pre-candidate
countries.

PROGRESS mission is to strengthen the EU contribution in support of Member
States' commitment. PROGRESS will be instrumental in:
   1. providing analysis and policy advice on PROGRESS policy areas;
   2. monitoring and reporting on the implementation of EU legislation and policies
       in PROGRESS policy areas;
   3. promoting policy transfer, learning and support among Member States on EU
       objectives and priorities; and
   4. relaying the views of the stakeholders and society at large

For more information see:
http://ec.europa.eu/employment_social/progress/index_en.html

The information contained in this publication does not necessarily reflect the position
or opinion of the European Commission.




                                                                                  ii
Table of contents

Preface.....................................................................................................................................vii

1     General introduction ........................................................................................................1

Part I. Trends, Developments and State-of-Play...................................................................6

2     Defining the sector ............................................................................................................7

3     Structural characteristics of the sector: past and present ............................................8
    3.1       Production, value-added and employment trends in the EU .......................................8
    3.2       Value added and employment EU compared to US, Japan and BRICS ....................18
    3.3       Employment structure and work organisation...........................................................21
    3.4       Employment - main trends by job function ................................................................24
    3.5       Productivity and labour costs ....................................................................................29
    3.6       Industrial relations.....................................................................................................31
    3.7       Partnerships for innovation, skills and jobs ..............................................................31

4     Value chains.....................................................................................................................34
    4.1       Analysis of the value chain ........................................................................................34
    4.2       Restructuring..............................................................................................................36

5     Sector dynamics and the role of technological change, R&D and innovation ..........38

6     Trade, globalization and international competition ....................................................40
    6.1       Trade and international competition .........................................................................40
    6.2       Trade issues of relevance and importance to the sector............................................43
    6.3       Outsourcing and offshoring .......................................................................................43

7     Regulation........................................................................................................................44

8     SWOT...............................................................................................................................46

9     Drivers..............................................................................................................................47
    9.1       Identification of sectoral drivers: methodology and approach .................................47
    9.2       Sectoral drivers..........................................................................................................49

Part II. Future Scenarios and Implications for Jobs, Skills and Knowledge - Guide to
the reader................................................................................................................................53

10         Scenarios.......................................................................................................................54
    10.1         Overview of scenarios and main underlying drivers..............................................54



                                                                                                                                      iii
  10.2        The drivers – building blocks for scenarios ...........................................................55
  10.3        The scenarios – detailed discussion .......................................................................57

11       Job functions – towards a workable structure .........................................................58

12       Implications of scenarios by job function - volume effects ......................................63
  12.1        Volume effects scenarios High-end Customer Hi-Wi-Fi and Hi-Wi-Fi for Everyone
              65
  12.2        Volume effects scenarios Footloose and Offshored, and Fading Away.................66

13       Implications of scenarios-main emergent competences ...........................................67
  13.1        Introduction ............................................................................................................67
  13.2        Managers................................................................................................................71
  13.3        Computer professionals..........................................................................................73
  13.4        Engineers................................................................................................................75
  13.5        Supply Chain Managers .........................................................................................77
  13.6        Accounting & Finance............................................................................................79
  13.7        Sales & Marketing..................................................................................................81
  13.8        Support staff ...........................................................................................................83
  13.9        Metal and machinery workers ................................................................................85
  13.10       Electric and electronic equipment mechanics and fitters ......................................87
  13.11       Precision workers and repairers............................................................................88
  13.12       Assemblers..............................................................................................................90
  13.13       Labourers and operators........................................................................................92

Part III. Available Options to Address Future Skills and Knowledge Needs and
Recommendations - Guide to the reader .............................................................................95

14       Strategic choices to meet emergent skills and knowledge needs .............................96
  14.1        Introduction ............................................................................................................96
  14.2        Possible strategic choices ......................................................................................96
  14.3        Matching future skills and knowledge needs by making the right choises.............98
  14.4        Managers..............................................................................................................100
  14.5        Computer Professionals .......................................................................................103
  14.6        Engineers..............................................................................................................105
  14.7        Supply Chain Managers .......................................................................................107
  14.8        Accounting & Finance..........................................................................................109
  14.9        Sales & Marketing................................................................................................111
  14.10       Support staff .........................................................................................................113



                                                                                                                                iv
   14.11        Metal and machinery workers ..............................................................................115
   14.12        Electric and electronic equipment mechanics and fitters ....................................117
   14.13        Precision workers and repairers..........................................................................119
   14.14        Assemblers............................................................................................................121
   14.15        Labourers and operators......................................................................................123
   14.16 Scenario implications, future skills and knowledge needs and possible solutions:
   summary and main conclusions .........................................................................................124

15        Conclusions and recommendations for education and training ...........................127
   15.1         Introduction ..........................................................................................................127
   15.2 Conclusions and recommendations for education and training ................................127

16        Main other conclusions and recommendations ......................................................133
   16.1         Introduction ..........................................................................................................133
   16.2         Main other recommendations...............................................................................134

Annex I. Contributors to this study....................................................................................138

Annex II. Participants final workshop, Brussels 20-21 November 2008 ........................139

Annex III Strategic options – a detailed description ........................................................140

References .............................................................................................................................145

Glossary ................................................................................................................................152




                                                                                                                                    v
vi
Preface

This report presents the final results of the study Comprehensive analysis of emerging
competences and economic activities in the European Union in the Computer, Electronic and
Optical Products Sector. The report is part of a series of sixteen future-oriented sector studies
on innovation, skills and jobs under the same heading, commissioned by the European
Commission (DG Employment, Social Affairs and Equal Opportunities). Eleven of these
studies were executed by a core consortium led by TNO (Netherlands Organization for
Applied Scientific Research) and consisting of TNO Innovation Policy group (Leiden, the
Netherlands), TNO Labour (Hoofddorp, the Netherlands), TNO Innovation and Environment
(Delft, the Netherlands, SEOR Erasmus University (Rotterdam, the Netherlands) and ZSI
(Centre for Social Innovation, Vienna, Austria). The core consortium was in charge of the
overall management of the study, the further elaboration and application of the overall
approach and methodology, as well as data collection and analysis. This study on future skills
and jobs in the Computer, Electronic and Optical Products Sector has been executed by core
team staff (see Annex 1 for team composition).

The study was carried out during the period January 2008-May 2009. Stakeholders in the
sector, including the European sectoral partners and representatives of various other
organisations, have been involved in various ways and forms throughout the study. This
included a sectoral kick-off meeting at the start of the study and three multisectoral
stakeholder meetings in Brussels during which intermediate results of the studies were
presented and discussed. Valuable workshop discussions in the frame of the project were held
and inputs received from a number of experts. Apart from multiple inspiring consortium
(‘internal’) workshops, two main ‘external’ workshops were held. We would like to thank S.
de Munck (TNO), P. de Jager (TNO), Professor P. Schelkens (Vrije Universiteit Brussels)
and Th. Martens (Philips Corporate Technologies) for their participation in a first external
workshop in Delft on scenarios and their implications in September 2008.

A draft final version of this report was validated and complemented during a second external,
final workshop in Brussels on 20 and 21 November 2008. The final workshop brought
together an apt mixture of different European and national sector experts representing the
industry, European social partners, other various representative organizations, academia as
well as the European Commission (see Annex 2 for a full list of participants). The workshop,
which formed an explicit and integral part of the methodological approach, yielded a number
of helpful comments and insights which have been used in further finalising the study. We
express our sincere gratitude to all workshop participants and to all those that contributed to
this study.

A special word of thanks holds for the European Commission, notably Jean-François Lebrun
and Manuel Hubert, and Radek Owczarzak of the European Foundation for the Improvement
of Living and Working Conditions, who proved to be excellent guides during the project.

Delft, 1 May 2009
Dr Frans A. van der Zee (overall project leader)




                                                                                          vii
1      General introduction

This report presents the final results of the study Comprehensive analysis of emerging
competences and economic activities in the European Union in the Computer, Electronic and
Optical Products Sector. The report is part of a series of sixteen future-oriented sector studies
on innovation, skills and jobs under the same heading, commissioned by the European
Commission (DG Employment, Social Affairs and Equal Opportunities). The study was
executed by a consortium led by TNO (Netherlands Organization for Applied Scientific
Research) and consisting of TNO, SEOR – a consultancy of Erasmus University (Rotterdam,
the Netherlands) and ZSI (Centre for Social Innovation, Vienna, Austria). The study was
carried out during the period January 2008-May 2009.

While the main focus of the study is on the future of skills and jobs by 2020, the study is both
backward- and forward-looking in nature. It analyses recent relevant sector developments and
trends and, at the same time, depicts the current state of play in the sector with an emphasis
on innovation, skills and jobs. Current trends and developments form the stepping stone and
fundament for the second and third future-oriented part of the study which is scenario-based,
forward-looking and exploratory in nature.

Background and context
The study should be placed against the background of the EU’s renewed Lisbon strategy in
which securing and improving EU competitiveness and redeploying the European economy
to new activities with more value-added and new and better jobs are key. In the process of
change and restructuring to adapt to new realities, there is a need for a more strategic
management of human resources, encouraging a more dynamic and future-oriented
interaction between labour supply and demand. Without there is the risk that bigger
shortages, gaps and mismatches of skills will result not only in structural unemployment but
also hamper longer-term competitiveness.

Skills and jobs are of vital importance for the future of the European economy and have
recently gained increasing attention, both at national and EU level. As stressed by the
European Council in March 2008, investing in people and modernising labour markets is one
of the four priority areas of the Lisbon Strategy for Growth and Jobs. The New Skills for
New Jobs initiative launched in December 2008 (European Commission, 2008) elaborates on
how this could best be done. The initiative aims to enhance human capital and promote
employability by upgrading skills, as well as to ensure a better match between the supply of
skills and labour market demand. More transparent information on labour market trends and
skills requirements, but also the removal of obstacles to the free movement of workers in the
EU, including administrative barriers would help achieve this goal, and improve
occupational, sector and geographical mobility. The initiative also stresses the need to
improve the Union’s capacity for skills assessment (by improved monitoring and
forecasting), anticipation (by better orientating skills development) and matching with
existing vacancies. The current financial and economic crisis makes these challenges even
more pressing. Further strengthening the economic resilience and flexibility of the European
economy and its Member States calls, along with other measures, for support of employment
and further facilitation of labour market transitions (European Commission, 2008a:10).




                                                                                               1
Approach and methodology
The study takes a longer term future perspective, and looks ahead to 2020, but also back, and
takes a highly aggregated European perspective. While it is fully acknowledged that more
detailed Member State and regional analyses are important and vitally important for
anticipating future skills and knowledge needs, the European perspective has been central in
this analysis. Key to the study and a common point of departure was the use of a pre-defined
methodological framework on innovation, skills and jobs (Rodrigues, 2007). During the
course of this study this framework has been further developed, operationalised and applied
to the sector. The approach combined desk research and expert knowledge available in a
broad and dedicated research team with the knowledge and expertise of ‘external’ sector
experts. The purpose of this common uniform methodology is to deliver results that enable
comparisons across and between sectors and hence enable the preparation of possible future
actions to investigate the topic of new future jobs and skills for Europe, by encouraging a
more effective interaction between innovation, skills development and jobs creation. The
methodology is structured along various steps, each step providing inputs and insights for
next steps to come. Overall, the methodology covers the following steps:

Step 1. Identification of economic activities to be considered (i.e. sector selection)

Step 2. Main economic and employment trends and structures by sector

Step 3. Main drivers of change

Step 4. Main scenarios

Step 5. Main implications for employment – changes by job function

Step 6. Main implications for skills – emerging needs by job function

Step 7. Main strategic choices to meet future skills and knowledge needs

Step 8. Main implications for education and training

Step 9. Main recommendations

Step 10. Final Workshop.

Further and next steps
The results of this study – along with 15 other sector studies using the same approach and
being released at the same time - will serve as a guide in launching further EU-led but also
other actions, by industry, sectoral partners, education and training institutes and others. One
important aim of the study is to promote the strategic management of human resources and to
foster stronger synergies between innovation, skills and jobs in the sector in the medium and
longer run, taking into account the global context and encouraging adaptations to national and
regional specificities. A very important element in further enabling and facilitating these
goals is sound and continuous monitoring together with a uniform and consistent way of
analysing future skills and knowledge needs for the various decision-making levels involved.
The approach taken in this study aims to provide a broader framework that does exactly this.
Further dissemination and explanation of the methodology at the Member State, regional and
local level are therefore vital in the follow-up of this EU level study, as is its actual take-up.
The results of the study include implications, conclusions and recommendations to anticipate
future skills and knowledge needs. It does not in any way, however, assess or evaluate current


                                                                                                2
or planned policies. Conclusions and recommendations may therefore coincide but may also
oppose current policies and/or policy plans at the EU, national or regional level. The
implications, conclusions and recommendations logically follow from scenarios – credible
plausible sector futures – meant to better structure and anticipate possible future
developments.

Looking ahead in times of crisis
Even though the year 2020 may currently seem far off for most of us, the future will
announce itself earlier than we think. In times of financial and economic crisis there is a
logical tendency to focus on the now and tomorrow; withstanding and surviving the crisis are
prime. Nevertheless, at the same time the medium and longer term ask for adequate attention.
In this current age of continuing and pervasive globalisation, strong technological change and
innovation affecting production and consumption around the globe, timely preparations to be
able meet future skills and job needs are called for more than ever before. This is even more
true in the face of an ageing European society and ditto workforce.

Contents in three parts
The report consists of three main parts. Part I analyses recent relevant sector developments
and trends and depicts the current state of play in the sector, with an emphasis on innovation,
skills and jobs. The findings of Part I of the report combine original data analysis using
Eurostat structural business statistics and labour force survey data with results from an
extensive literature review of relevant already existing studies. While giving a clear and
concise overview of the most important trends and developments, the prime function of Part I
is to provide the fundaments and building blocks for Part II of the study. The findings of Part
I are based on the present and the recent past. The second part of the report is future-oriented
and looks at sectoral developments and more specifically developments in skills and jobs in
and towards 2020. The core of part II consists of plausible future scenarios and their
implications for jobs, skills and knowledge. These implications have been analysed for
various job functions. In a final part III, a range of main strategic options (‘choices’) to meet
the future skills and knowledge needs is reviewed, including implications for education and
training. The study concludes with a number of recommendations for the sector (individual
firms, sector organizations, sectoral partners), education and training institutes and
intermediary organisations, and last but not least, policy-makers at various levels, ranging
from the EU to the local level. Terminology used in this report is further explained and
defined in a Glossary at the end of this report.




                                                                                               3
4
                Part I


Trends, Developments and State-of-Play




                                         5
Part I. Trends, Developments and State-of-Play

Guide to the reader

Part I presents the results of steps 1, 2 and 3 of the common methodology applied to the
computer, electronics and optical products sector. Step 1 delineates and defines the sector.
Step 2 presents the main economic and employment trends and developments in the sector
(mapping) and reports the results of a SWOT (Strengths, Weaknesses, Opportunities and
Threats) analysis. Step 3 analyses the main drivers of change of relevance for the sector based
on a meta-driver approach and expert opinion. Part I of the report consists of 8 chapters.
Chapter 2 identifies and statistically defines the sector. Chapter 3 provides an overview of the
structural characteristics of the sector, including developments and trends in employment,
production and value added. It contains information on work organisation (part-time/full-
time, gender, age), and industrial relations, but also on emergent trends by function. It also
addresses existing partnerships for innovation, skills and jobs, one of the possible policy
instruments to better prepare for and adapt to the future, facilitate mutual learning and boost
innovative capacity both at the sector and firm level. While not part of the methodology as
such, partnerships form an interesting example of how the development of skills and jobs can
be linked to innovation. Chapter 4 discusses the value chain (network) and its evolution over
time, including issues of restructuring and relocation. Chapter 5 focuses on innovation, R&D
and technological change, while chapter 6 analyses the impact of globalisation and trade on
and for the sector. Chapter 7 highlights the importance of regulation especially in relation to
employment. Chapter 8 provides the results of a SWOT analysis of the sector. Chapter 9
concludes with an overview of the most important drivers for the sector.




                                                                                              6
2       Defining the sector

The computer, electronic and optical products sectors are in the NACE Rev 1.1 classification
defined as D Manufacture of electrical and optical equipment. This classification
distinguishes four sub-sectors (see Table 2.1) One of these four sub-sectors, the manufacture
of electrical machinery and apparatus n.e.c. (NACE 31), falls beyond the subject of this study
and is therefore not included in this report. The NACE Rev 1.1 classification does not really
reflect the current situation in the sector, with on the hand companies focusing on the design
and production of components and on the other hand companies active in the design and the
production of the end products. The electronic components manufacturers - producing
Integrated Circuits and other components - can be regarded as the suppliers of the other.
NACE Rev 2 – introduced in 2008 and gradually taking effect - concerns the most recent
statistical reclassification, and reflects, apart from statistical revisions, also some of the
structural developments in industry structure at aggregate level. NACE Rev 2 is more
distinctive as to the different constituent elements of the industry than the former Rev 1.1
classification. It also includes, for instance, relatively new industries such as the electronic
games hardware (i.e. game computers). Data collection under NACE Rev 2 has only started
since January 2008; no data series are available as yet. Since the contents of this report relate
to trends and the report is predominantly backward-looking in nature, based on time series,
most of the statistical analyses take the previous classification Rev 1.1 as their point of
departure. Hence, the quantitative part of the sector analysis will follow the NACE
classification Rev 1.1. However, where relevant and possible, the qualitative analysis will
follow as much as possible the distinction between (i) electronic components, (ii) computers,
communication equipment and consumer electronics, and (iii) medical, optical and
measurement products The following Table 2.1 shows the classification of the sector
according to NACE Rev 1.1 and NACE Rev 2.

Table 2.1 Statistical classification computer, electronic and optical products sector
                    NACE Rev 1.1                                    NACE Rev 2
Electronic          32.1 Manufacture of electronic valves and       26.1 Manufacture of electronic components
components          tubes and other electronic components           and boards

Computers,          30.0 Manufacture of office machinery and        26.2 Manufacture of computers and
communication       computers                                       peripheral equipment
equipment and                                                       26.3 Manufacture of communication
consumer            32.2 Manufacture of television and radio        equipment
electronics         transmitters and apparatus for line telephony   26.4 Manufacture of consumer electronics
                    and line telegraphy
                    32.3 Manufacture of television and radio
                    receivers, sound or video recording or
                    reproducing apparatus and associated goods
Medical, optical    33.1 Manufacture of medical and surgical        26.5 Manufacture of instruments and
and                 equipment and orthopaedic appliances            appliances for measuring, testing and
measurement         33.2 Manufacture of instruments and             navigation; watches and clocks
devices             appliances for measuring, checking, testing,    26.6 Manufacture of irradiation, electro
                    navigating and other purposes, except           medical and electrotherapeutic equipment
                    industrial process control equipment            26.7 Manufacture of optical instruments and
                    33.3 Manufacture of industrial process          photographic equipment
                    control equipment                               26.8 Manufacture of magnetic and optical
                    33.4 Manufacture of optical instruments         media
                    and photographic equipment
                    33.5 Manufacture of watches and clocks
Source: Eurostat (2007b)



                                                                                                                  7
3         Structural characteristics of the sector: past and present

3.1       Production, value-added and employment trends in the EU

The computer, electronic and optical products sector accounted for 134,264 enterprises in the
EU-27 in 2005, employing over two million persons. Total turnover in the computer,
electronic and optical products sector amounted to EUR 405 billion in 2005, with the
consumer electronics being the largest sector representing 51%, and electronic components
and medical, optical and measurement devices accounting for 14% and 35%, respectively
(Eurostat, 2008). The computer, electronic and optical products industries generated EUR
154 billion of value added, which is equivalent to 1.34 % of EU GDP in 2006 (see Table 3.1).

Trends in production
During the last ten years, EU-27 production of computers, electronic and optical products
has risen steadily until 2006 and followed – at some distance - the economic cycle for
industrial output as a whole (Figure 3.1). The average annual growth rate between 1996 and
2006 was 4.2% and surpasses the average growth of the total industry in 2005-2006. The
main contributor to this growth rate was the radio, television and communication equipment
manufacturing (NACE 32) (Eurostat, 2007a).

Figure 3.1 Index of production electrical and optical equipment compared to total
industry EU-27, 1996-2006 (2000=100)
 120

 110

 100

    90

    80

    70
         1996   1998      2000   2002    2004      2006
                Total industry
                Electrical and optical equipment
Source: Eurostat, 2007a


The largest producer of computer, electronic and optical products in the EU-27 is Germany,
followed by France, the United Kingdom, and Italy. Together, these four countries represent
61% of the EU production in the sector in 2004. Germany is also the largest producer in the
various sub-sectors. However, Ireland is the main producing country in the computers
manufacturing. From the new Member States, Hungary is the biggest producer, followed at
some distance by the Czech Republic and Poland (Eurostat, 2007a).

Over the years 1996-2006, production growth in the computer manufacturing sector (NACE
30) has followed the growth trend as observed for the sector as a whole, although in 2002


                                                                                           8
there was a stronger downturn in production than in average for the sector as a whole (see
Figure 3.2). Since then, growth in production has been lagging behind (Eurostat, 2007a).

Figure 3.2 Index of production computers and office equipment compared to electrical
and optical equipment manufacturing EU-27, 1996-2006 (2000=100)
 160

 140

 120

 100

  80

  60
       1996     1998     2000     2002     2004   2006
                 Electrical and optical equipment
                 Computers and office equipment
Source: Eurostat, 2007a

Production growth in the radio, television and communication equipment sector (NACE 32)
followed the same growth pattern as observed for the sector as a whole, yet more positive and
more upward-bound (see Figure 3.3). Growth in the periods 1996-2000 and 2003-2006 was
stronger than for the sector as a whole, but the downturn in the period 2000-2003 was much
sharper than the overall sector average (Eurostat, 2007a).

Figure 3.3 Index of production radio, television and communication equipment
compared to electrical and optical equipment manufacturing EU-27, 1996-2006
(2000=100)
 120

 110

 100

  90

  80

  70

  60
       1996     1998      2000     2002    2004   2006
              Electrical and optical equipment
              Radio, TV & communication equipment
Source: Eurostat, 2007a

Production in the optical products sector (NACE 33) grew steadily over the period 1996-2006
and performed better than the industry as a whole (see Figure 3.4). The optical products


                                                                                           9
sector did not experience the downturn in production in the ‘bubble-burst’ period 2000-2003
that hit the rest of the sector. Main contributors to the growth in production were the medical
and surgical equipment (NACE 33.1) and the measuring instruments sub-sectors (NACE
33.2) (Eurostat, 2007c).

Figure 3.4 Index of optical products manufacturing compared to electrical and optical
equipment manufacturing EU-27, 1996-2006 (2000=100)
    120

    110

    100

     90

     80

     70
          1996   1998     2000     2002     2004   2006
                  Electrical and optical equipment
                  Instrument engineering
Source: Eurostat, 2007a

Trends in value added
In terms of value added performance, the computer, electronic and optical products sector in
the EU has been outperforming the overall economy (i.e. all other sectors) by large. With
growth levels in the 1995-2000 period of more than 9% annually and almost 13% in the new
Member States, growth in the industry overall has been vigorous. Even after the bubble burst
in the beginning of the century, growth has been stronger than for the economy as a whole,
with 3.4% in the EU-15 and 7.8% in the new Member States1.




1
  Note that due to missing data the EU is an approximation of the EU-27 only. GDP and trade data was not
available for Bulgaria, Romania, Cyprus, Malta and Latvia. Cyprus and Malta lacked data on employment. This
applies to tables 3.2 and following. The list of winning, losing momentum, upcoming, retreating (see subsequent
tables in text) indicates for which countries data was available. Throughout this report, a change in volume or
absolute number between two years - e.g. the number of jobs - is measured as the average annual growth.
Similarly, a change of a share or an index is measured as total change over the entire period. That is, if the share
in 2000 was 10% and in 2006 15%, we report a change of share of 5%.


                                                                                                                10
Table 3.1 Value added computer, electronic and optical products industries, 1995-2006
                       Computer, electronic and optical products                  Overall economy
                                      industries
                            2006      95-00      00-06      95-06            2006      95-00     00-06      95-06
                                          %          %         %                          %         %          %
EU                       154 235         9.2        3.6       6.1     11 468 970         2.8       2.0        2.3
EU-15                    147 240         9.1        3.4       6.0     10 883 245         2.8       1.9        2.3
NMS                        6 995        12.8        7.8      10.0        585 725         2.7       3.7        3.2

Winning                    69 814      12.3        8.6        10.3      3 260 306         2.2       1.6        1.9
Losing                     10 960       6.9       -3.0         1.4        435 178         4.9       3.4        4.1
momentum
Upcoming                   27 261      18.9        8.2        12.9      1 992 038         2.5       1.8        2.1
Retreating                 46 047       5.5       -2.1         1.3      5 747 595         3.0       2.1        2.5

                   Value added         Annual average growth                GDP        Annual average growth
                   Million euro                                      Million euro
                          2006        1995-      2000-     1995-            2006       1995-     2000-      1995-
                                       2000       2006      2006                        2000      2006       2006

          Concentration index >100                              Concentration index <100
Growth    Winning: Germany, Denmark, Finland, Sweden, Czech     Upcoming:
          Republic, Hungary, Slovenia                           France, Portugal, Slovakia
Decline   Losing momentum:                                      Retreating:
          Austria, Ireland                                      Belgium, Italy, Netherlands, Greece, Spain, United
                                                                Kingdom, Estonia, Lithuania, Poland
Source: Eurostat/TNO



Box 1. Concentration index: what it is and what it measures
The concentration index assesses the relative contribution of a specific sector to the national economy
compared to a greater entity, such as the EU, thereby correcting for the size of the country. In more
general terms, the concentration index is a measure of comparative advantage, with changes over time
revealing changes in the production structure of a country. An increase of the concentration index for
a sector signifies relatively fast growth of that particular sector in the country concerned compared to
the same sector in the EU.

How does the concentration index work in practice? We’ll give a few examples: if sector x represents
a 5% share of the German economy and a 5% share of the EU economy, the concentration index of
sector x equals a 100. If sector x represents 5% of the German economy, but 10% of the EU economy,
the concentration index of sector x is 50. If the same sector x represents 10% of the German economy
and 5% of the EU economy, the concentration index of sector x is 200.

The concentration index concept can be applied using different indicators (variables). In our study we
measure the concentration index using employment, value added and trade, in order to make a
distinction between the relative performance of countries EU-wide. We distinguish between four
country groupings, each signifying a different sector performance over time. If a sector in a country
has a strong position (hence showing a concentration index higher than 100) and has experienced a
clear index growth over the last years, the sector is defined as winning in that country. If the sector has
a strong position, but experienced a decline of the concentration index, we say the sector is losing
momentum. If the sector has a weak position, but gained in the past, we say that the sector in that
country is upcoming. If the sector has a weak position and experienced a decline of the index, we say
that the sector is retreating.




                                                                                                                 11
If we take a look at which countries have been real winners in terms of sector value added
growth, these include Germany, the Czech Republic and Hungary, Finland, Sweden and
others. This group of winners scores relatively low on overall GDP growth, however. The
group of retreaters is the largest group of countries and includes countries such as the UK, the
Netherlands, Belgium, and a number of new Member States.

Table 3.3 shows that the group of winning countries makes up 44% of all value added in the
EU (and showing high growth!), and the upcoming countries another 16%, together
accounting for 60% of total sector value added in the EU. At the other extreme, the retreating
countries make up for another 32% in share, and are heavily loosing (a 17% decline).

Table 3.2 Value added computer, electronic and optical products by sub-sector, 1995-
2006
                       NACE 30, 32, 33       NACE 30             NACE 32              NACE 33
                          Levels 2006
EU                           154 235            13 976              71 796              68 463
EU-15                         147 240           13 551              67 461              66 228
NMS                             6 995              425               4 335               2 235

                 Changes 2000-2006
EU                             3.6                -5.0                 3.2                 6.6
EU-15                          3.4                -4.7                 2.7                 6.7
NMS                             7.8              -10.8                14.8                 4.4

                 Changes 1995-2006
EU                             6.1                -1.1                 7.1                 7.6
EU-15                          6.0                -1.0                 6.7                 7.6
NMS                           10.0                -3.5                18.2                 6.4

Source: Eurostat/TNO


Analysis of value added developments at the sub-sector level reveals sizeable differences.
Striking is the deterioration in value added in the office equipment and computer
manufacturing industry over the period 1995-2006. Both other sub-sectors performed
comparatively well. The audio, video and telecoms manufacturing industry did particularly
well in the new Member States, showing an average annual growth of 14.8% during 2000-
2006 and 18.2% during1995-2006. The medical and optical equipment sub-sector also
developed positively in both periods, especially so in the EU-15. France, Luxembourg,
Sweden, Lithuania, the Czech Republic, Hungary and Finland did particularly well in the
overall period 1995-2006, with annual growth rates of 12 to 21 per cent. In audio, video and
telecoms manufacturing strong growers were Hungary (30.2%), Sweden (29.7%), and
Finland (25.2%), followed by the Czech Republic (21.8%), France (15.9%) and Poland
(14.4%). In the most recent period Sweden, the Czech Republic, Hungary, Denmark and
Finland still showed strong growth, even though below 20%. Strong decreases were observed
in the Netherlands (-14.8% annually during the period 2000-2006), Ireland (-10.4%), the UK
(-9.8%) and Belgium (-8.1%).




                                                                                             12
Table 3.3 Value added computer, electronic and optical products industries, 1995-2006
                                       Share in country                                  Share in EU
                                        Level                    Change                  Level                 Change

EU                                         100                        0                     100                       0
EU-15                                       95                       -1                     101                      -1
NMS                                          5                        1                      90                      18

Winning                                     44                       15                     156                      57
Losing momentum                              8                       -4                     207                    -158
Upcoming                                    16                        6                      89                      35
Retreating                                  32                      -17                      64                     -36

                                      Share in             Total change     Share in value added   Total change in share
                                 national GDP                   in share               sector EU

Definition                                2006               1995-2006                     2006              1995-2006
Source: Eurostat/TNO. Explanatory note: *defined as share in country divided by share in EU, times 100.

Trends in employment
The computer, electronic and optical products sector in the EU employs over two million
persons, most of whom are based in the ‘old’ EU-15. Employment has been decreasing on
average by 1.7% annually over the period 1995-2006. Yet in the new Member States
employment has been steadily rising, with a growth of 1.6% annually.

Table 3.4 Employment computer, electronic and optical products industries, 2000-2006
                              Level 2006            Annual growth             Share in EU           Change in share

EU                                  2 058 232                       -1.7                    100                       0
EU-15                               1 685 365                       -2.3                     82                      -4
NMS                                   372 866                        1.6                     18                       4

Winning                               714 458                        2.1                     35                       8
Losing momentum                       197 344                       -4.6                     10                      -2
Upcoming                               71 253                        1.7                      3                       1
Retreating                          1 075 176                       -4.0                     52                      -7

             Concentration index >100                                Concentration index <100
Growth       Winning:                                                Upcoming:
             Germany, Czech Republic, Hungary                        Finland, Latvia, Lithuania
Decline      Losing momentum:                                        Retreating:
             Netherlands, Ireland, Sweden, Bulgaria, Slovenia,       Belgium, France, Italy, Luxembourg, Denmark
             Slovakia                                                Greece, Spain, Austria, Portugal, United Kingdom,
                                                                     Estonia, Poland, Romania
Source: Eurostat/TNO

When we take a closer look and try to group countries in accordance with their employment
performance (taking together both employment growth and the concentration index, see
glossary), we observe a group of winners consisting of Germany, the Czech Republic and
Hungary, a group of upcoming countries including Finland, Latvia and Lithuania and groups
of countries that show declining employment performance. Most of the EU Member States,
both old and new, find themselves in one of the latter categories, with most being ranked in
the least performing group of retreaters. Note that employment as a single indicator does not
imply much about the economic performance of the sector as such. This changes when


                                                                                                                         13
combined with data on value added changes. For example, Lithuania now finds itself in the
group of upcoming countries, whereas under value added Lithuania was ranked as retreating,
clearly not a good sign when taken together, signifying a decreasing labour productivity over
time.

Table 3.5 Employment computer, electronic and optical products by sub-sector, 2000-
2006
                       NACE 30, 32, 33       NACE 30             NACE 32            NACE 33
                          Levels 2006
EU                          2 058 232         150 429             814 118            1 093 685
EU-15                       1 685 365         117 277             634 077              934 012
NMS                           372 866          33 152             180 041              159 673

                 Changes 2000-2006
EU                             -1.7               -7.3                -3.6                 1.0
EU-15                          -2.3               -9.0                -4.8                 1.0
NMS                             1.6                1.7                 1.6                 1.6

Source: Eurostat/TNO

Looking at employment in the different sub-sectors, i.e. office equipment and computer
manufacturing (NACE 30), audio, video and telecoms manufacturing (NACE 32) and
medical and precision instruments manufacturing (NACE 33), it is clear that more than half
of employment is in the medical and precision instruments industry, which is also the only
sector with a light increase in employment over time, both in the old and new Member States.

The audio, video and telecoms manufacturing industry and - especially - the office equipment
and computer manufacturing industry show significant employment losses, of 3.6 and 7.3 per
cent annually, respectively. This decline has predominantly taken place in the EU-15 (4.8 and
9 per cent, respectively). The declines are certainly not restricted to the EU-15 though, with
for instance Hungary and Poland showing steep decreases in employment in office equipment
and computer manufacturing (-15.8% and -13.5% annually, respectively). Steep increases at
the other end do, however, also occur, such as in the Czech Republic (+26.6%) and Estonia
(+16.2%). Also Austria (+22.8%), Portugal (+14.9%) and Greece (+10.6%) belong to the
strong gainers. Whereas Austria is a retreater when looking at its overall employment
performance, this does not hold for the office equipment and computer manufacturing sector.

In audio, video and telecoms manufacturing country differences in employment are almost as
distinct, despite the less strong changes at overall EU level. The UK, Ireland, the Netherlands
and Denmark faced a decrease of 12-13% annually, and Greece even of 21%. Increases in
employment were far less spectacular, the front-runner being the Czech Republic, followed
by Hungary (5.4%). Employment developments in medical and precision instruments
manufacturing have been less pronounced, both overall and on an individual country basis,
with notable exceptions being Ireland (+5.8%), the Czech Republic (+4.6%), Latvia (+6.3%)
and Hungary (+6.9%), and in the negative Estonia (-24.4%) (all annual changes).




                                                                                            14
Figure 3.5 Vertical shares: employment in the computer, electronic and optical products
sector in total employment by NUTS 2 region, 2006




                                                                                    15
Regional specialisation in employment in the computer, electronic and optical products sector
is shown in Figure 3.5. What is clearly shown is that the sector is an important employer in
many regions in Europe. The most specialised regions in 2007 can be found in Central
Europe. Other regions that are highly specialised are located in Western Scotland, Finland,
Ireland and Sweden.

In addition to regional specialisation patterns as revealed in 2006, Figure 3.6 shows the
annual changes in regional employment in the computer, electronic and optical products
sector over the period 1995-2006. Growth is observed in several regions in Spain, Italy,
Greece, the UK, but also in many new Member States. Strong growth is shown in most of the
eastern new Member States, the eastern part of Finland, certain regions in Germany, Italy and
Slovakia, southern Portugal and its neighbouring region in Spain, western Romania, as well
as several regions in Greece. Most countries that host growth regions also have regions in
decline. A decline in employment can be observed in France, Finland, Ireland, Denmark, the
western part of Germany, a large part of the UK, and in several parts of Italy, Spain, Austria,
Hungary, Poland, Romania, Bulgaria and Sweden. The sharpest decline is shown in the UK,
the Netherlands, Belgium, France and Germany, as well as Sweden and Bulgaria.




                                                                                            16
Figure 3.6 Employment changes in the computer, electronic and optical products sector
by region, 1999-2006 (% per annum)




                                                                                  17
3.2     Value added and employment EU compared to US, Japan and BRICS

Europe’s traditional competitors, the United States and Japan, faced strong declines in
employment during the period 1995-2005 as is shown in Table 3.6. Declines were also
observed in Europe, but only modestly so, except for the consumer electronics sector. But
also here the decline was with 29% less pronounced than in the US (-51%) and Japan (-36%).
Overall the EU-152 faced a decrease of 4.6% in employment for the sector as a whole, both
the United States and Japan show a much stronger decline of over 30%. In the medical,
optical and measurement devices sector Europe even showed an increase in employment of
8.5%, with the United States and Japan lost substantially (11% and 26%, respectively). In
terms of the share of the sector in total manufacturing employment, Europe experienced a
slight decrease of 0.4 percentage point to a share of 10.3%, against decreases of 2.2% and
1.7% in the US and Japan (share 12.6% and 16.5%, respectively).

Not only in employment, but also in growth of value added Europe outperformed the United
States and Japan. Here Europe faced a growth of 62%, against a loss of 24% in Japan and
7.5% in the United States. The only sector in the US that showed a positive growth pattern
over this period was the optical products sector (23%); yet growth in Europe in this sector
was 9 times as high (208%). In the difficult consumer electronics sectors, the EU-15 showed
a positive growth of 32% over this period, while the US and Japan showed substantial losses
(-12.5% and -26%, respectively). In terms of value added growth per employee, Europe was
outperformed by the US, except for the medical, optical and measurement devices segment.
Also here strong increases were observed: 184% growth in Europe, against 39% in the US
and 13% only in Japan. The strongest looser in all three regions in terms of employment as
well as value added was consumer electronics.

However, when we compare the performance of Europe with the performance of the
emerging BRIC economies (i.e. Brazil, Russia, India and China), the picture is much different
(see Table 3.7). While Europe experienced an overall decrease in employment, Brazil, Russia
and China showed strong increases in employment in the same period, the only exception
being India. While Russia increased its employment especially in the electronic components
sector, Brazil improved mainly in the optical products sector. The rise of China is especially
remarkable with employment growing approximately from 3m to 8m between 1995 and
2005. Unfortunately no figures were available for China at the sub-sector level.

Value added grew substantially in China (+651%) and in Russia (+189%). Value added
growth was comparatively modest in India (+24%), and negative in Brazil (-2.4%). This also
held for the value added per employee (-10.6%), where both Russia and India faced
substantial increases (+65% and 37%, respectively). Growth in value added per employee
was stronger than the growth in employment, indicating productivity gains.

Most pronounced growth in Brazil occurred in the medical, optical and measurement devices
sector, with employment and value added growing with 26% and 21%, respectively. In
Russia the electronic components sector showed the most significant rise in employment
(49%), with a sizeable increase in value added (169%), though even higher in the medical,
optical and measurement devices sector (273%). The latter, however, showed only a modest

2
 Note that the figures in Table 3.6 have been taken from UNIDO and cannot be compared on a one-to-one basis
with other figures in this report. No data were available for EU-25 and EU-27. For reasons of comparability, the
UNIDO data have been unchanged.


                                                                                                             18
rise of 4.5% in employment. India also witnessed a strong growth in value added in this
sector (72%), yet with a loss of employment (-19%).

Table 3.6 Trends in employment and value added – EU-15, USA and Japan, 1995-2005 1
                                   Employment       Change in share        Value added         Change in     Value added
                                  growth (in %)      of employment        growth (in %)      value added      growth per
                                                     manufacturing                           share (in %)       employee
                                                         total (in %)                                             (in %)
Europe (EU-15)                              -4.6                  -0.4               62.1              2.8          69.9
  Electronic components2                    -1.1                   0.0               31.9              0.1          33.4
   Consumer Electronics3                   -28.6                  -0.7               -7.3             -0.9          29.9
    Medical, Optical and                     8.5                   0.3              207.8              3.6         183.7
   Measurement devices4

United States6                             -31.2                 -2.18               -7.5             -3.2            34.3
  Electronic components2                   -35.7                 -1.35              -12.5            -1.73            36.1
   Consumer Electronics3                   -51.3                 -1.31              -31.1            -1.98            41.5
     Medical, Optical and                  -11.3                  0.48               23.2             0.51            38.9
   Measurement devices4

Japan                                      -32.6                 -1.71              -24.2             0.13            12.5
  Electronic components2                   -31.7                 -0.68              -25.8             -0.1             8.7
   Consumer Electronics3                   -36.1                 -1.01              -25.0            -0.02            17.3
    Medical, Optical and                   -26.1                 -0.02              -16.3             0.25            13.3
   Measurement devices4
Source: TNO Research, based on data of UNIDO (ISIC Rev. 3)
1
   EU-15: 1995-2004 (Except France: 1996-200; Germany: 1998-2004; Greece: 1995-1998; Luxembourg: 1995-2003; Portugal:
1996-2004), Data for Europe (EU-15) is composed from data individual EU-15 countries ; USA: 1997-2004; Japan: 1995-2004
2
   Electronic Components comprises: ‘Electric motors, generators and transformers’ (ISIC 3110), ‘Electricity distribution &
control apparatus’ (ISIC 3120), ‘Insulated wire and cable’ (ISIC 3130), ‘Other electrical equipment n.e.c’. (ISIC 3190) and
‘Electronic valves, tubes, etc.’ (ISIC 3210)
3
   Consumer Electronics comprises: ‘Office, accounting and computing machinery’ (ISIC 3000), ‘TV/radio transmitters; line
communication apparatus’ (ISIC 3220) and ‘TV and radio receivers and associated goods’ (ISIC 3230)
4-
   Medical, Optical and Measurement devices comprises: ‘Medical, measuring, testing appliances, etc.’ (ISIC 331), ‘Optical
instruments & photographic equipment’ (ISIC 3320) and ‘Watches and clocks’ (ISIC 3330)
6
  USA:’Total’ and ‘Medical, Optical and Measurement devices’ do not contain data on ‘Watches and Clocks’ (ISIC 3330)




                                                                                                                    19
Table 3.7 Trends in employment and value added - BRICs5, 1995-2005
                                    Employment        Change in share         Value added         Change in      Value added
                                   growth (in %)       of employment         growth (in %)      value added       growth per
                                                       manufacturing                            share (in %)        employee
                                                           total (in %)                                               (in %)
Europe (EU-15)                                -4.6                  -0.4                62.1               2.8          69.9
  Electronic components2                      -1.1                   0.0                31.9               0.1          33.4
   Consumer Electronics3                     -28.6                  -0.7                -7.3              -0.9          29.9
    Medical, Optical and                       8.5                   0.3               207.8               3.6         183.7
   Measurement devices4

Brazil                                         9.2                   0.3                -2.4             -1.47            -10.6
  Electronic components2                       2.2                  0.47                 0.3             -0.46             -1.9
   Consumer Electronics3                      11.0                 -0.18                -9.8             -0.97            -18.7
     Medical, Optical and                     26.3                  0.01                20.6             -0.04             -4.5
   Measurement devices4

Russia                                        24.0                   1.9               188.8             -0.46            64.5
  Electronic components2                      49.2                  1.41               169.1             -0.42            32.2
   Consumer Electronics3                       5.8                  0.04                39.8             -0.28           256.6
     Medical, Optical and                      4.5                  0.45               272.8              0.24           132.9
   Measurement devices4

India                                        -10.5                 -0.71                23.6             -2.02            38.2
  Electronic components2                      -2.7                 -0.17                18.1             -1.34            21.3
   Consumer Electronics3                     -23.5                 -0.34                15.3             -0.69            50.6
     Medical, Optical and                    -18.8                  -0.2                71.6              0.01           111.3
   Measurement devices4

China7                                       125.4                  8.25               650.8             6.51             N.A.
  Electronic components2                      N.A.                  N.A.                N.A.             N.A.             N.A.
   Consumer Electronics3                      N.A.                  N.A.                N.A.             N.A.             N.A.
    Medical, Optical and                      N.A.                  N.A.                N.A.             N.A.             N.A.
   Measurement devices4
Source: <TNO Research>, based on data of UNIDO (ISIC Rev. 3)
2
   Electronic Components comprises: ‘Electric motors, generators and transformers’ (ISIC 3110), ‘Electricity distribution &
control apparatus’ (ISIC 3120), ‘Insulated wire and cable’ (ISIC 3130), ‘Other electrical equipment n.e.c’. (ISIC 3190) and
‘Electronic valves, tubes, etc.’ (ISIC 3210)
3
   Consumer Electronics comprises: ‘Office, accounting and computing machinery’ (ISIC 3000), ‘TV/radio transmitters; line
comm. Apparatus’ (ISIC 3220) and ‘TV and radio receivers and associated goods’ (ISIC 3230)
4-
   Medical, Optical and Measurement devices comprises: ‘Medical, measuring, testing appliances, etc.’ (ISIC 331), ‘Optical
instruments & photographic equipment’ (ISIC 3320) and ‘Watches and clocks’ (ISIC 3330)
5
   Brazil: 1996-2005, Russia: 2001-2005; India: 1998-2004
6
  Russia:’Total’ and ‘Medical, Optical and Measurement devices’ do not contain data on ‘Watches and Clocks’ (ISIC 3330)
7
   Data for China based on ISIC Rev 2




                                                                                                                        20
3.3      Employment structure and work organisation

Industry structure developments by region
As Barrios et al. (2008) have argued, strong regional specialisation applies in ICT
manufacturing. It appears that EU employment in ICT manufacturing is located in a limited
number of regions in Northern and Eastern Europe, with Hungarian, Czech and Finnish
regions being among the most specialised in manufacturing of office machinery and
computers (NACE 30) and audio, video and telecoms (NACE 32). Irish and UK regions (both
in Scotland and the Southern part of the UK) appear to highly specialise in office machinery
and computers. An interesting question relates to whether employment variations in a given
sector/region are likely to be influenced by the overall sector's variation in employment
across the whole EU. In other words, whether employment changes observed at the regional
level for a given sector may just be due to employment variations for the sector as a whole,
such as a severe downturn due to increased global competition such as happened in the office
machinery and computers sector. Another example applies to fast expansion driving
employment growth as in the case of the medical and optical equipment sector (NACE 33), a
sector that has shown to be particularly influenced by the overall macroeconomic cycle.
Results of a shift-share analysis by Barrios et al. (2003: 30-32) indicate that the combined
regional/sector dimension (the shift term in the analysis) is the most relevant in explaining
recent employment changes in the EU medical and optical equipment sector (and also in the
telecoms and the ICT services sectors), with more than a 50% of employment change
explained by trends specific to the regions and industries considered (shift term) rather than
sectoral performance (mix term), or general overall employment changes (share term) at
national level.

Table 3.8 provides a summary of the employment changes for a number of selected regions,
as analysed by Barrios et al. It shows that the overall decline in employment has especially
taken place in UK regions.

Table 3.8           Regional changes in employment by sub-sector, 2000-2004
NACE 30                                    NACE 32                                    NACE 33
South Western Scotland (UK) -              Eastern Scotland (UK) -32.8%               Berkshire, Buckinghamshire and
32.7%                                                                                 Oxford (UK) -13.9%
Shropshire and Staffordshire (UK)          Ile de France -5.9 (F) %                   West Midlands (UK) -21.1%
– 31.2%
East Wales (UK) -44.2%                     Northumberland, Tyne and Wear              Essex (UK) -15.8%
                                           (UK) -40.2%
Hampshire and Isle of Whight                 stra Mellansverige (Sw) -29.4%           Surrey, East and West Sussex (UK)
(UK) -21.4%                                                                           -11.4%
Ile de France (F) -12.8%                   Gloucestershire, Wiltshire and             East Anglia (UK) -15.8%
                                           North Somerset (UK) -23.2%
Source: Barrios et al. (2008). Figure indicating the % of change in employment in the sub-sector in the region.


Industry structure and employment by firm size
Most enterprises in the computer, electronic and optical products industry are SMEs. Of all
employees working in the industry, slightly less than half work in large companies (over 250
employees) and slightly more than half in SMEs (defined as having less than 250 employees).
Firms employ less than 50 persons account for around 30% of employment (see Table 3.9), a
figure that is somewhat less in the new Member States. The majority of firms (96%) is found
in this size category, however (see Table 3.10). Firms employing between 50 and 249
employees account for almost 22% of employment. The average firm size in the medical,


                                                                                                                    21
optical and measurement instruments industry is the smallest of the three, with one of the
important explanatory factors being that the industry is far from homogeneous, with a
collection of many small niche markets behind and therefore less attractive for large firms to
enter.

Table 3.9 Employment by firm size. Computer, electronic and optical products, 2006
                                   Shares 2006                           Total change of shares 1999-2006

                      <49            50-249             >249             <49          50-249           >249
                                Number of employees                              Number of employees

EU                      29.5           21.5            49.0           3.8              2.6                    -6.4
EU-15                   30.1           21.7            48.2           4.6              3.0                    -7.5
NMS                     26.3           20.3            53.3          -0.8            -0.2                      1.0
Source: Eurostat/TNO. Note: Country groupings are based on employment (See Table 3.4).

Table 3.10 Number of firms by size. Computer, electronic and optical products, 2006
                                   Shares 2006                           Total change of shares 1999-2006

                     <49         50-249          >249                   <49          50-249            >249
                             Number of employees                                Number of employees

EU                       96.1              3.1               0.8               0.4          -0.1              -0.2
EU 15                    95.7              3.5               0.9               0.2           0.0              -0.2
NMS                      97.6              1.8               0.6               0.5          -0.3              -0.2



Employment, part-time work and self-employment
The relative number of entrepreneurs in the medical and optical equipment sector is
considerably higher than in both other sub-sectors, and especially in the new Member States
(14%). It is lowest in the audio, video and telecoms manufacturing sector, and only slightly
higher in office equipment and computer manufacturing. There are large differences by
Member State, however. Belgium, Greece, Italy, Spain and Poland stand out in terms of
relative high numbers of entrepreneurs.

Table 3.11 Share of entrepreneurs and share of part-time workers in total employed,
2006
                               Share of entrepreneurs in                       Share of part-time in
                                    total employed                                total employed
                            NACE 30     NACE 32       NACE 33             NACE 30     NACE 32        NACE 33
EU                                5             3           8                   6              5           8
EU-15                             5             3           7                   7              6           9
NMS                               5             5          14                   1              1           3

Winners                             5               4               7                4             1           10
Losing momentum                     1               1               3                8             7            1
Upcoming                           13                              13                6                          6
Retreating                          8               6               5                5             4            7

Source: Eurostat/TNO. Note: Country groupings are based on employment (See Table 3.4).




                                                                                                                22
As Figure 3.8 and Table 3.11 show, part-time work is not widespread in the computer,
electronic and optical products sector and is particularly low in the new Member States.
There are no signs that this trend will be reversed in the near future. Compared to the non-
financial business economy the percentage of people working full-time in the computer,
electronic and optical products industries in the EU-27 is high. Compared to the industrial
average (7.6%, see figure), the proportion of workers engaged in part-time work is only
slightly smaller. The distribution over age categories in the sector is not much different than
the non-financial business economy in EU-27 in 2006 (Eurostat, 2007a).

Figure 3.8 Work organisation computer, electrical, electronic and optical products, 2006




Source: Eurostat (2007b). Note : figures apply to NACE sectors 30, 31, 32 and 33 and therefore include also
electrical machinery and equipment.

Table 3.12 Employment by gender, age and education: Computer, electronic and optical
products, 2000-2006
                           EU                          EU 15                            NMS
                        Share           Change          Share          Change           Share            Change
 Women                  36              0              33             -1              50                2
 Age < 40               53             -6              51             -7              58               -1
 Age 40 – 50            27              2              28             3               23               -3
 Age > 50               20              4              20             4               19                5
 Low education          16             -6              17             -5              9                -5
 Mid education          51              2              47             0               71                4
 High education         33              4              36             5               20                1
 Definition            Share % Total change %         Share %    Total change %       Share %     Total change %
                          2006        2000-2006           2006       2000-2006           2006         2000-2006
Source: Alphametrics/TNO based on Eurostat Labour Force Survey


Gender distribution
Overall, 36 per cent of all employed are women, a figure that is considerably higher in the
new Member States. In France, Germany, Italy, Switzerland and the United Kingdom, the
share of women in overall employment tends to be in the 25-35% range, remaining stable
over the period 1997 – 2007, and showing in some cases even a slight decline. Exceptions are
Cyprus and Slovakia with 21.9 % and 52.7 % of all employed being women. Among the
emerging economies of Asia, such as Malaysia, the Philippines, Thailand and Vietnam, the
share of woman tends to be over 50 % (ILO, 2007; Eurostat, 2007a).




                                                                                                              23
Working conditions
The working conditions in Europe and the USA in the electronic components industry are
relatively good. The environments in which the production workers work are usually clean
and relatively noise-free, with computer chips being manufactured in so-called “clean
rooms”. Still, the use of (hazardous) chemicals and machinery form a danger to the human
health of the workers (CBI, 2005; US Department of Labor, 2008). There is a huge difference
in the working conditions of European and US-based ICT manufacturing firms and
manufacturing locations in other countries. The working conditions in production facilities
that produce or assemble computer parts in developing countries are often below western
standards: long working weeks, compulsory over-time, unsafe factories, the use of hazardous
materials, wages below subsistence levels, etc. (SOMO 2005; CAFOD 2004).

Initiatives that aim to improve the working conditions further include, for example, the 2004
‘Electronics Industry Code of Conduct’ adopted by Hewlett-Packard, Dell, IBM, Cisco
Systems, Microsoft and Intel and five Contract Manufacturers (Solectron, Sanmina-SCI,
Jabil, Celestica and Flextronics). This code of conduct aims to ensure safe conditions, worker
rights and environmental responsibility in the global electronics supply chain. (EICC, 2008)
In the telecommunications sector, the Global e-Sustainability Initiative (GeSI) (including BT,
Nokia, Deutsche Telekom and Vodafone) has identified labour issues as a priority for the
industry to address.

3.4        Employment - main trends by job function

One of the most interesting indicators for analysing the future on jobs and skills is the trends
and developments that can be identified at the (micro) level of job functions. More than
aggregate employment and more than figures about gender and age distribution can changes
in job functions tell us something about ongoing change and restructuring in the sector.
Changes in (the need for) competences and changes in the distribution of job functions are
closely linked to each other, both at the level of the sector and at the level of the firm.
Competences are combined in occupation profiles, and can be distinguished in core
competences, specialization competences or complementary competences (Rodrigues,
2007:34). Another distinction is between theoretical, technical and social competences (i.e.
knowledge, skills and competences in ECVET) (ibidem). Identifying the changes in job
functions by sector is a first step towards a better understanding of the changing competence
needs in the sector. Competences for the purpose of this study are assumed to be located in a
general grid defined by the main occupation functions: general management, marketing,
financial and administrative management, R&D, logistics, production management,
production, quality and maintenance (Rodrigues, 2007:35).

As a first step towards identifying trends in competences, the observed changes in the
distribution of job functions over time will be analysed, using Labour Force Survey (LFS)
data.3 In the second part (the scenario-based future-oriented part), a further elaboration of
these changes on the need for new and existing competences will be provided. The analysis
starts with an analysis of the state-of-play, i.e. the situation as per 2006. Subsequently,
changes in job functions over time are discussed, in general (overall) and for different
categories of workers classified according to educational level.




3
    Data on occupational structure follow the availability of overall employment figures presented earlier.


                                                                                                              24
Employment by occupation: state of play and main changes
This sub-section discusses the main trends in job function categories (occupations) in the
computer, electronic and optical products sector. The analysis is based on a combination of
labour force survey (LFS) data and general employment data collected by Eurostat. Due to
the nature of survey data – being based on restricted samples of the total employment
population – data reported at the most aggregate (EU) level is more reliable than the same
information provided at Member State level if the focus is directed at sector or sub-sector
level (see the separate data annex of this report). The same applies to the combination of
occupation data and educational profiles. Figures therefore should be interpreted with
caution, indicating primarily directions of change and less reliable where it comes to the
magnitude of change.

As can be seen from Tables 3.13 and 3.14, engineers have the largest share (21%) in the
computer, electronic and optical products industries in the EU, and especially so in the EU-
15, with 19% and 21%, respectively. The new Member States employ remarkably less
engineers (13%). A similar pattern can also be seen for computing professionals and other
professionals, albeit less distinct. For the new Member States assemblers is the most common
occupation (23%), with fitters (10%) being third after engineers. In the EU-15 assemblers and
fitters account for 8% and 7% only. Service workers, other craft and related trades workers,
and labourers have the lowest shares in employment in this sector (1%, 2% and 4%,
respectively).

Table 3.13 Employment level by occupation computer, electronic and optical products
industries, 2006



                                                                                                momentum


                                                                                                              Upcoming




                                                                                                                               Retreating
                                                                                    Winning


                                                                                                Losing
                                              EU-15



                                                           NMS




                                                                        EU




TOTAL                                  1685 365       372 866    2 058 232    714 458         197 344      71 253        1 075 176
Managers                                164 659        20 006      184 665     41 637          15 360      12 053          115 614
Computing professionals                 134 768        22 875      157 643     47 312          16 611       8 183           85 537
Engineers                               346 755        48 874      395 629     130471          33 359      15 777          216 022
Business professionals                   76 649        12 879       89 528     27 719          13 300       2 763           45 746
other professionals                     177 989        35 123      213 112     61 880          17 188       3 640          130404
Office clerks and secretaries           158 125        21 385      179 510     70 109          13 977       1 638           93 786
service workers                          17 763         2 569       20 332      5 512           2 666         179           11 974
Metal machinery workers,                 69 090        24 744       93 834     42 532           7 289      3 457            40 557
blacksmiths
Electric equipment mechanics,           115 237        37 756     152 993      59 790          10 087       5 121          77 995
fitters
Precision. handicraft. craft            103 591        14 504     118 095      70 999           9 320       2 936          34 840
printing
Other craft. trades workers              38 350         6 217      44 567      26 934           3 170       1 798          12 665
Assemblers                              137 041        85 005     222 046      65 783          30 819       8 379         117 065
Other plant and machine operators        77 487        29 444     106 930      35 577          11 135       3 798          56 421
Labourers                                67 862        11 484      79 346      28 204          13 064       1 530          36 548
Note: The country grouping (winning, losing momentum, upcoming and retreating) is based on employment (table 3.4)




                                                                                                                          25
Table 3.14 Occupation shares computer, electronic and optical products industries,
2006




                                                                                                             momentum



                                                                                                                                    Upcoming



                                                                                                                                                             Retreating
                                                                                            Winning


                                                                                                             Losing
                                                  EU-15



                                                             NMS



                                                                            EU
TOTAL                                           100         100         100                100                   100               100                      100
Managers                                         10           5           9                  6                     8                17                       11
Computing professionals                           8           6           8                  7                     8                11                        8
Engineers                                        21          13          19                 18                    17                22                       20
Business professionals                            5           3           4                  4                     7                 4                        4
Other professionals                              11           9          10                  9                     9                 5                       12
Office clerks and secretaries                     9           6           9                 10                     7                 2                        9
Service workers                                   1           1           1                  1                     1                 0                        1
Metal. machinery workers.                         4           7           5                  6                     4                 5                        4
Blacksmiths
Electric and -equipment mech. fitters               7        10              7               8                     5                 7                        7
Precision, handicraft, craft printing               6         4              6              10                     5                 4                        3
Other craft. trades workers                         2         2              2               4                     2                 3                        1
Assemblers                                          8        23             11               9                    16                12                       11
Other plant and machine operators                   5         8              5               5                     6                 5                        5
Labourers                                           4         3              4               4                     7                 2                        3
Note: The country grouping (winning,, losing momentum, upcoming and retreating) is based on employment (table 3.4)


Table 3.15 Changes occupation shares computer, electronic and optical products,
2000-2006
                                                                                                      momentum



                                                                                                                        Upcoming



                                                                                                                                               Retreating
                                                                                 Winning

                                                                                                      Losing
                                                EU-15



                                                           NMS



                                                                      EU




Managers                                          1          0          1          0                      -1             4                       2
Computing professionals                           2          3          2          1                       4             5                       1
Engineers                                         3          4          2          1                      -2             1                       4
Business professionals                            0          2          0          0                       0             0                       0
other professionals                               3         -5          2          0                       3             1                       3
Office clerks and secretaries                    -2         -2         -2         -1                      -1             0                      -4
service workers                                   0          0          0          0                       0            -2                       0
Metal, machinery workers.                        -1          0          0          0                       0            -2                      -1
Blacksmiths
Electric and electronic equipment                -1         -2         -1         -3                      -2            -4                      -1
mechanics and fitters
Precision, handicraft, craft printing             0         -1          0         -1                       0             1                      -1
Other craft and trades workers                    0          0          0         -1                       0             2                       0
Assemblers                                       -5          5         -2          2                      -4            -2                      -4
Other plant and machine operators                 1          1          1          1                       0             0                       1
Labourers                                         0         -5         -1         -2                       3            -3                      -1
Note: The country grouping (winning,, losing momentum, upcoming and retreating) is based on employment (table 3.4)

There are some remarkable similarities and differences between the different groups of
countries. The share of engineers in total employment is highest whether countries belong to
the categories of winning, losing momentum, upcoming or retreating countries as earlier
described. The upcoming countries have a very high share of managers (17%), while in the


                                                                                                                                                   26
winning countries their share is only 6%. In the group of winning countries the occupations
precision, handicraft and craft printing form a fairly large share (10%), while in the other
groups of countries, and the EU as a whole, their share is much smaller.

Overall, no major changes have occurred as to the shares of occupations in the computer,
electronic and optical products sector between 2000 and 2006 (see Table 3.15). Some
exceptions apply, however. The share of assemblers, for example, declined by 5 % in the EU-
15, while at the same time their share rose by 5% in the new Member States. The share of
office clerks and secretaries declined for all groups of countries. The share of engineers rose
(by 2% for total EU), and as engineers form the largest share in total employment in the
sector this shift is considerable in absolute terms.

Almost all occupations in the computer, electronic and optical products sector show a
negative trend for low educated workers (see Table 3.16). The total share of low educated
workers in the sector decreased with 5%. Especially the decline of low educated service
workers is very significant (-20%). Strikingly, this decline took mostly place in retreating
countries; in upcoming countries the share of low educated service workers remained stable.
The computing professionals and precision handicraft craft printing are the only two
occupations where the share of low educated workers is rising. While the picture looks more
or less the same across the different country groups for computing professionals, for precision
handicraft craft printing strong differences appear. In the winning countries the share of the
low educated workforce engaged in precision handicraft craft printing ross with 5%, while in
the upcoming countries it decreased with 23%.

Table 3.16 Changes occupation shares low educated employees, 2000-2006
                                                                                           momentum



                                                                                                       Upcoming



                                                                                                                     Retreating
                                                                                 Winning

                                                                                           Losing
                                                EU-15



                                                           NMS



                                                                      EU




Managers                                        -2          -1        -2          -2            2       1          -4
Computing professionals                          0           3         1           2            4       4          -2
Engineers                                       -2           1        -2          -1           -5       0          -3
Business professionals                          -2          -7        -3           1           -4       0          -5
other professionals                             -3          -5        -3          -3           -1       2          -2
Office clerks and secretaries                   -1          -3        -2           2            1     -10          -4
service workers                                -22          -7       -20          -8           -6       0         -29
Metal, machinery workers.                       -4          -8        -7          -7            6      -5          -7
Blacksmiths
Electric and electronic equipment                -4         -2         -4           3         -10         5       -10
mechanics and fitters
Precision, handicraft, craft printing            3          2          2          5           -15     -24           3
Other craft and trades workers                  -4          0         -5         -3             6       9         -17
Assemblers                                      -4        -11        -11         -9            -8       9         -12
Other plant and machine operators               -5         -1         -6        -12           -11     -24          -3
Labourers                                      -13        -18        -13        -11           -25      13         -12
Total                                           -5         -5         -6         -2            -6      -1          -8
Note: The country grouping (winning,, losing momentum, upcoming and retreating) is based on employment (table 3.4)




                                                                                                                         27
Table 3.17 Changes occupation shares medium educated employees, 2000-2006




                                                                                             momentum



                                                                                                        Upcoming



                                                                                                                    Retreating
                                                                                   Winning

                                                                                             Losing
                                                   EU-15



                                                              NMS


                                                                        EU
Managers                                           -4          7        -3         4              0       2         -7
Computing professionals                            -6         -7        -3        -3              5     -23         -6
Engineers                                           3        -15         2         2             -2       4          2
Business professionals                              4          3         5        -3             -2      -5         11
other professionals                                 3         14         4        -5             -8      -5         11
Office clerks and secretaries                      -3        -17        -4        -1             -7      10         -8
service workers                                    12          7        12        21              1       0         10
Metal. machinery workers. Blacksmiths               5          9         9         6             -9       4         13
Electric and electronic equipment
mechanics and fitters                               4          5         6        -1             6        9         13
Precision, handicraft and craft printing           -3         -7        -3        -2             7       19         -5
Other craft. trades workers                         5        -15         5         6           -24      -53         13
Assemblers                                          3         11        11         8             5       -6         11
Other plant and machine operators                   4          4         6        11             9       18          5
Labourers                                          10         21        11         9            21       -8         10
Total                                               0          2         2         1             1       -6          2
Note: The country grouping (winning, losing momentum, upcoming and retreating) is based on employment (table 3.4)

The overall employment occupation share of the EU for middle educated workers in the
computer, electronic and optical products industry increased by 2% between 2000 and 2006.
Middle educated service workers and labourers showed the largest increases in shares, of
12% and 11 % respectively. The share of middle educated service workers rose especially
much in the group of winning countries (21%). The increase in the share of labourers on the
other hand, took place mainly in the group of countries that are loosing momentum (21%).
The share of middle educated managers decreased by 3% for the EU as a whole, but rose with
7% in the new Member States, and to a lesser extent also in the winning and upcoming
countries in the sector.

Throughout the EU highly educated workers experienced a considerable increase in number
of occupations (4% growth). The increase was largest for the service workers, but this holds
only for EU-15 countries (10%). New Member States showed no increase in the share of
highly skilled service workers. Even more remarkable is that the increase in service workers
took place in the group of retreating countries (19%); the group of winning countries showed
a decline in the share of highly skilled service workers (-13%). And while the overall EU
increase in the share of other craft trades workers is zero, there are some major shifts in their
share in upcoming countries and countries that are losing momentum (a rise of 45% and 18%
respectively).

Overall, a general trend of up-skilling can be observed in the EU computer, electronic and
optical products sector, meaning a move to a higher –predominantly middle and high -
educated workforce, with a consequent decrease of the low educated workforce.




                                                                                                                        28
Table 3.18 Changes occupation shares high educated employees, 2000-2006




                                                                                             momentum



                                                                                                             Upcoming



                                                                                                                        Retreating
                                                                                   Winning

                                                                                             Losing
                                                   EU-15



                                                              NMS


                                                                        EU
Managers                                            7         -6          5        -2            -1          -3         11
Computing professionals                             5          4          2         1            -8          19          7
Engineers                                           0         14          0        -1             7          -4          2
Business professionals                             -2          4         -1         2             6           5         -5
other professionals                                 0         -9         -1         8             9           3         -9
Office clerks and secretaries                       4         20          6         0             6          -1         12
service workers                                    10          0          8       -13             5           0         19
Metal. machinery workers. blacksmiths              -2         -1         -2         1             3           1         -6
Electric and electronic equipment
mechanics and fitters                                0        -2         -2         -3            4         -13          -3
Precision, handicraft, and craft printing            0         5          0         -3            8           5           2
Other craft. trades workers                         -1        15          0         -3           18          45           3
Assemblers                                           1         0          0          0            3          -4           0
Other plant and machine operators                    1        -2          0          1            2           6          -2
Labourers                                            3        -3          2          2            4          -4           2
Total                                                5         3          4          1            5           7           6
Note: The country grouping (winning,, losing momentum, upcoming and retreating) is based on employment (table 3.4)


3.5       Productivity and labour costs

The average labour productivity4 of the EU computer, electronic and optical equipment sector
was EUR 52 000 in 2004 which is high compared to other manufacturing sectors. On the
level of sub-sectors, the apparent labour productivity ranged from EUR 50 000 (instrument
engineering) to EUR 70 000 (computers and office equipment).

Table 3.19 Labour productivity computer, electronic and optical products sector, 2004
                                                    Apparent labour                  Average                Wage adjusted
                                                        productivity           personnel costs          labour productivity
                                                    (EUR thousand)            (EUR thousand)                           (%)
Electrical and optical equipment*                              52.0                       37.0                      141.0
Instrument engineering                                         50.0                       35.0                      138.0
- Medical and surgical equipment and                           45.2                       31.4                      143.9
orthopaedic appliances
- Instruments and appl. for measuring,                       58.0                    43.0               137.0
checking, testing, navigating and other
purposes
- Industrial process control equipment                       45.4                    37.1               122.5
- Optical instruments and photographic                       50.0                    35.0               140.0
equipment
- Watches and clocks                                         40.0                      --                    --
Computers and office equipment                               70.0                    40.0               179.0
- Office machinery                                           56.0                    41.0               140.0
- Computers and other information                            74.9                    39.3               191.0
processing equipment
Radio, TV & communication equipment                          62.9                    41.5               151.4
Source: Eurostat (2007a). Notes: * NACE 30,31,32,33, i.e. including also electrical machinery and equipment.
The remainder of this table excludes NACE sector 31.


4
    Apparent labour productivity defined as value added divided by the number of persons employed.


                                                                                                                            29
The differences in average personnel costs between the sub-sectors are lower, ranging from
EUR 35 000 (instrument engineering) to EUR 41 500 (radio, TV & communication
equipment), resulting in an average of EUR 37 000 for the whole sector. The relatively large
differences in apparent labour productivity among sub-sectors are reflected in the wage
adjusted labour productivity, which overall amounted to 179.0 % for computers and office
equipment and 138.0 % for instrument engineering (Eurostat, 2007b). The wage adjusted
labour productivity is defined as the ratio of value added divided by personnel costs (the
latter having been divided by the share of employees in the number of persons employed).
Labour productivity in large companies is almost twice that in SMEs (Europe Innova 2006).

Marked differences exist though between the apparent labour productivity levels of the
various Member States in all three sub-sectors, with a clear split between the ‘old’ and the
new EU Member States (see Table 3.20). In office equipment and computer manufacturing,
Ireland, the UK and Germany are clear front-runners in the EU-15; in the new EU-12
especially Hungary stands out with an absolute level that is higher than that of Finland and
only somewhat below Sweden and France.

Table 3.20 Apparent and wage adjusted labour productivity by sub-sector, 2004
                             Apparent labour productivity          Wage adjusted labour productivity
                                       (in k€ )                                (in %)
                           NACE 30     NACE 32       NACE 33      NACE 30      NACE 32       NACE 33
EU-27                         70.0           62.9         50.0       179.0          151.4         138.0

Belgium                        59.9        102.8          53.4       136.8         147.7         119.2
Denmark                        75.0         54.1          77.4       157.3         126.0         165.1
Germany                        96.9         75.6          53.3       166.5         142.3         130.8
Ireland                       107.2        203.0         104.1       251.3         486.7         290.3
Spain                          28.2         40.6          38.0        85.9         126.4         132.9
France                         56.6         61.2          58.9       131.8         115.3         124.2
Italy                          43.8         49.9          44.8       120.3         126.8         129.3
Cyprus                            ..        23.4          20.4           ..        199.5         123.5
Luxembourg                        ..           ..         43.0           ..                      134.2
Netherlands                       ..           ..            ..          ..            ..            ..
Austria                        33.6         88.4          59.1        87.7         145.1         157.5
Portugal                       31.1         50.4          23.3       129.4         202.0         137.9
Finland                        44.7        146.9          62.8       123.0         277.1         147.0
Sweden                         53.0        120.9          73.8       109.7         164.9         130.8
United Kingdom                107.4         60.4          70.0       250.0         146.0         168.9
Norway                         80.9         78.3          73.2       118.3         128.3         117.9

Bulgaria                        6.2          6.4           3.6        207.7        214.8         152.7
Czech Republic                 14.0         18.4          13.1        162.2        190.5         143.8
Estonia                        13.0         10.2          15.1        140.4        149.1         171.7
Latvia                         12.0         14.5           6.6        237.7        314.0         156.9
Lithuania                       7.6         10.3           9.3        194.4        172.7         162.3
Hungary                        47.9         24.4          13.8        450.3        230.0         156.2
Romania                         4.3         10.8           6.4        199.4        200.7         201.7
Poland                         15.8         17.5          10.7        177.7        203.4         149.8
Slovakia                       -9.1          9.4          10.8       -118.1        142.2         148.1
Slovenia                       31.0         26.3          21.7        157.0        139.5         142.1

Source: Eurostat (2007a)

In terms of wage adjusted productivity, the top 3 countries in the EU-15 keep their front-
runner position. However, most new Member States equal or do better than the EU-15, with
Hungary outperforming all others. A similar pattern can be seen in the other sub-sectors. In


                                                                                                    30
audio, video and telecoms manufacturing Ireland, Finland and Sweden do best in terms of
apparent labour productivity, Ireland being the absolute front runner in terms of wage
adjusted labour productivity. The same applies to the medical and optical equipment sector.
Although in the new Member States apparent labour productivity is sometimes very low in
absolute euro-terms (cf. Latvia, Bulgaria and Romania), their wage adjusted labour
productivity is at similar high levels or higher than the high-performers in the old EU-15.

3.6    Industrial relations

The degree of unionisation in the computer, electronic and optical products sector is
comparatively low compared to other sectors. Traditionally the ICT hardware industry has
been located in regions with low levels of unionisation like Scotland and Wales or Silicon
Valley and the South in the US. Nowadays much production manufacturing is located in so-
called export processing zones in Asia with either limited access for unions to the work floor
or even outright bans (ILO, 2007; CAFOD, 2004; SOMO, 2005). This trend also feeds back
as a downward cost pressure to developed countries, lowering pay and working conditions.
As a result production also within Europe shifts from West to the new Member States,
making use of contract manufacturers that are less exposed to pressures from consumer
markets. This outsourcing of production steps is an important trend especially in the EU-15.

Employees in European manufacturing firms are under the constant threat of outsourcing and
off-shoring and have to compete with manufacturing firms all over the world. Although this
is also true for other global manufacturing and services industries, in the computer, electronic
and optical products industry outsourcing and off-shoring occur at a high frequency, the
general trend being that OEMs (Original Equipment Manufacturers) try to outsource their
production as much as possible. The impact of such divesture for employees depends per case
and per employee and can be influenced by seniority rights, the availability of alternative jobs
in the neighbourhood and the type of contract the employees has. Many employees on the
work-floor are hired through temp agencies. The higher value added product manufacturing
that still is located in Europe is not owned by OEMs, but is contracted to EMS (Electronic
Manufacturing Services). Often these EMS are closed down after 3-5 years when preferred
sourcing contracts end (SOMO, 2005; ILO, 2007).

3.7    Partnerships for innovation, skills and jobs

One of the central tenets of the renewed Lisbon Strategy is the partnership concept; by
building a European partnership for growth and employment, the reforms needed to boost
growth and employment will be facilitated and speeded up (European Commission, 2005).
Partnership in this view “mobilises support” (mobilisation) and “gets the different players at
work together” (collective effort), as well as “makes sure that the(se) objectives and reforms
are taken on board by all the various players” thus spreading ownership (ibidem, page 14). In
the implementation of the European Cohesion Policy, the partnership principle is
fundamental as well. The EU recognises the importance of involving local and regional
actors, in particular in areas where greater proximity is essential such as innovation, the
knowledge economy and new information and communication technologies, employment,
human capital, entrepreneurship, support for SMEs and access to capital financing. Beyond
that public-private partnerships and further improvement of governance in the fields of
entrepreneurial innovation, cluster management, innovation financing are promoted at all
levels – from the local to the regional, the national and the EU level as well as across sectors.
Partnerships for innovation, skills and jobs, in connection with technology platforms,


                                                                                              31
industrial high level groups, as well as lead market and cluster initiatives are being promoted
at both European and national level.

Existing partnerships for innovation, skills and jobs generally show a number of
characteristics, which include:

• Involvement of all relevant actors, ranging from companies, research organisations,
  education and training institutes to public administration and others.
• Cross-sectoral approach: even though partnerships may be assigned to a specific sector,
  they often work across different business sectors.
• Cross-thematic approach, i.e. linking innovation, skills and jobs.
• Inclusion of general human needs into the partnership strategy: human needs, such as
  housing, health or mobility can be part of the formulated partnership vision or strategy
• Long term commitment of actors (members).
• Joint problem solving, i.e. working on problems that cannot be met by one member alone
• European dimension, i.e. being established at the European level.

Partnerships for innovation, skills and jobs can create a leverage effect for innovation,
especially if broader general human needs are taken into consideration.5 For instance,
partnerships in the tourism sector aiming at developing ‘leisure’ should combine knowledge
in tourism with, e.g., culture, sports and environment. A partnership aiming at developing the
quality of habitat consequently should combine knowledge on at least construction, furniture,
electronics and urban management. Partnerships for innovation, skills and jobs integrating
general human needs on European level are still very rare.6 It is likely to find more inclusive
partnerships on the national and regional level.

Whereas the potential benefits of partnerships are clear, finding strong examples that fit the
above characteristics at EU level are still difficult to find. There are, however, good examples
in various sectors at the national and the regional level. Some of these stand out in terms of
partnership approach, innovation capacity, approach for skills development, or their job
maintaining and job creating capacity. Examples include the City Fringe Partnership for
developing regional job opportunities in the printing sector and the ERRAC and EURNEX
network in the rail sector where a European approach is combined with a strong effort to
integrate latest research results in an virtual European training curriculum.

Partnerships, networks and clusters on innovation, jobs and skills often face similar barriers
and obstacles, whatever sector is at stake. These include:

•     Restricted scope: Partnerships often are set up in order to solve problems which can not
      be met by one partner on its own. The problems, thereby, are either defined bottom-up or
      articulated by the politics in a top-down process. In the latter case, the scope of
      partnership is limited to their given geographical scope and/or their thematic focus (If
      partnerships are established top-down as instrument to address specific problems they are
      usually restricted to the policy represented by the awarding authority, e.g. a particular
      Ministry). Similarly, partnerships and networks established at the European level, such as


5
    An argument put forward by professor Rodrigues at the workshop “Innovation policies for a knowledge
    intensive economy – assessing the European experience” in 2005 in Brussels.
6
    Outside the scope of the current series of studies, there is at least there is one good example, the European
    Construction technology platform (see http://www.ectp.org/default.asp ).


                                                                                                              32
    e.g. networks of excellence, technology platforms, etc. have a specific thematic focus (in
    this case innovation in research and development).
•   Short-term nature: Partnerships which are built up by means of public funding are often
    project driven, feature a short term nature and, generally, are not sustainable due to their
    dependence of a single fund.
•   Weak direct links between skills, jobs and innovation processes: Skills upgrading and job
    opportunities are a result of innovation processes. Therefore, partnerships which focus on
    innovation do seldom focus on skills and jobs with the same strong interest.
•   Sectoral restrictions: In general partnerships working on international or European level
    seem to be more likely to occur in strongly internationalised economic sectors with a
    common universal challenge (e.g. pollution or sustainable development). Then they are
    mostly limited to the problems they want to address.

Partnerships in the electronic, optical and computing equipment industries
The Electronics Leadership Council (ELC) (www.electronicsleadershipcouncil.org/default.
asp) was formed in October 2005 as a response to the first recommendation of the Electronics
Innovation and Growth Team’s (EIGT) report in 2004. The ELC aims to become a relatively
small but influential, business led body, representing the entire industry and its key
stakeholders. An appropriate senior involvement of government and research and
development associations was envisaged. The council monitors the implementation of the
recommendations of the EIGT report and also initiates work streams for tackling some of the
strategic problems that has been identified by the EIGT. The ELC does not duplicate
activities that are working well, instead may provide the glue to give critical mass to existing
activities or enhance existing activities where amore strategic input is needed7 (e.g. in the
area of skills).

The main objectives of the ELC are:

    •   to evaluate the key factors that will impact the electronics sector globally and identify
        the associated opportunities and challenges for the UK;
    •   to formulate a vision for the future of the electronics industry in the UK; and
    •   to agree on a roadmap (i.e. recommendations) for the industry and government to
        deliver this vision.

In its mission statement the ELC declares its role: clear leadership in steering the UK
electronics industry towards greater innovation and creativity, growth and profitability. To
achieve the objectives the ELC develops action plans for the sector alongside the following
four work streams:

    •   Within the work stream “Technology and Innovation” it was agreed that innovations
        should be introduced into the market, small and medium sized businesses supported in
        implementing innovation as well as information and knowledge transfer between all
        stakeholders improved. Joint activities are set in order to pursue these objectives.
    •   The “Skills & Education” work stream will establish a more strategic approach to
        skills and education in all areas and will work to ensure that government resources are
        better targeted. Additionally, the work stream aims at the establishment of new


7
  DTI (ed.) 2005: Electronics 2015 – Making a visible difference, Electronics Innovation and Growth Team
report, p. 12


                                                                                                     33
          training facilities, auditing of trainings and a stronger co-operation with the education
          sector.
      •   The third work stream deals with supply chain management by focussing on raising
          awareness of the value of better supply chain management across the industry.
      •   The fourth work stream aims to realise significant opportunities in public
          procurement for electronics business.

The council itself can be seen as networking organisation for innovation and knowledge
dissemination. However, it itself does not develop innovation.

OptecNet, Germany
OptecNet Germany registered association (OptecNet Deutschland e.V., www.optecnet.de) is
a supra-regional network of nine regional competence networks for optical technologies,
including Bayern Photonics, HansePhotonik, OpTecBB, OpTech-Net, Optence, OptoNet,
PhotonAix, PhotonicNet and Photonics BW. The network comprises small and medium sized
enterprises, large enterprises, research and development institutions, education organisations,
financial bodies and the consulting sector.

The membership structure as well as the objectives differ in the regional competence
networks according to their specific focus. Several thematic workgroups (those are project
and research co-operations between the different partners), are established in each regional
network aiming at developing new products and services. Activities include the organisation
of international thematic workshops as well as international information transfer and
dissemination of results. Some regional networks are also characterized by a strong focus on
fostering apprenticeship, vocational training and advanced vocational training.

The regional competence networks are mainly focussing on technological innovation through
co-operation. Lately gained knowledge is incorporated into training courses for employees
and qualification for unemployed in some regional networks.

The OptecNet is partner of the Competence Networks Initiative Germany and co-financed by
the German Federal Ministry for Education and Research.



4         Value chains

4.1       Analysis of the value chain

The configuration of the value chain of the computer, electronic and optical products sector is
nowadays characterized by at least three different ways of vertical integration and
specialisation (see Figure 4.1). In the early 1990s, the prevailing form of organizing the value
chain was through OEMs (Original Equipment Manufacturers). During the 1990s, some of
the OEMs including IBM, Philips, Cisco, Sun Microsystems, HP, Alcatel and Ericsson,
started to outsource some of the production manufacturing, but mainly kept ‘in-house’ the
branding, marketing, R&D, design, and manufacturing of electronics products, including
components. During the 1990s the OEMs gradually specialized further in core value added
domains, including R&D and branding/marketing, and started to outsource the whole
manufacturing and design part to new companies: the contract manufacturers. There are two


                                                                                                34
types of contract manufacturers: the ODMs (Original Design Manufacturing) and EMS
(Electronic Manufacturing Services). The ODMs design and manufacture their own complete
products and sell them to OEMs. Most of them are Asian - mainly Taiwanese – companies
that integrated the design function with the manufacturing of electronic products and
components. The ODMs usually have a limited range of (often computer) products and are
mostly located in Taiwan or China. They can lower the investment costs for the launch of
new products due to cost sharing. Some examples of ODM companies are Quanta, Asustek,
Compal, BenQ and Lite-On, each with a turnover of over EUR 4 billion (2004 figures:
SOMO, 2005). Some more recent developments are the ODMs that start selling their
products with their own brand names and therefore directly compete with the products of
their clients (OEMs), making them into own-brand name manufacturers (OBMs) (OECD
2006; SOMO, 2005; ILO, 2007).

Figure 4.1 The value chain over time




Electronic Manufacturing Services (EMS) are essentially service companies that take over
the responsibility for design and system integration and outsource component manufacturing
and assembly to other companies, either in Asia or Eastern Europe. The EMS provide this as
a service to OEMs and are mostly North-American, though with global presence, seeking to
locate their facilities near their customers and customers’ end market. Their services range
from manufacturing, product-assembly through logistics to after-sales services and support.
Contrary to the ODMs, they apply a wide range of product and product categories, including
PCs, telecoms products, medical electronics, industrial products etc. Their competence is to
allow changes in production volumes and flexibility of production and production volume
and to ensure vertical integration of the supply chain. The EMS face a risk, since they are
dependent on a small amount of customers; therefore most EMS focus on marketing and
product development to match the increasingly rapid changes on the demand side. Some
examples of EMS companies are Flextronics, Hon Hai, Sanmina-SCI, Solectron and
Celestica (all with turnovers of over 7 billion Euro, 2004 data (SOMO, 2005). Both the EMS
and ODMs outsource the low value added product manufacturing to traditional


                                                                                         35
subcontractors based in South-East Asia, China, Mexico, Philippines and Costa Rica. Supply
chain partnerships, joint ventures and alliances at global and regional level are formed to
integrate the different parts of the value chain, consisting of research, production, design,
setting standards, orchestrators, and assembly platforms. As OEMs require that their contract
manufacturers act at a global level, these EMS and ODMs increasingly diversify
geographically, not just in Asia and South America, but also by buying up facilities in Europe
and North America (ILO, 2007; SUMO, 2005; OECD, 2006).

Although many contract manufacturers seem to become more vertically integrated, a reverse
trend is also visible. There are also contract manufacturers that choose a virtual verticalisation
model; they focus on their core activities, while at the same time offering their customers the
best solution with related services (e.g. design, assembly, test and repair) without owning
those services (ILO, 2007).

Firm interrelationships and industry structure
The interrelationships between firms in the electronics and computer equipment
manufacturing industry are quite complex. The specialization and the competition between
different type of firms (OEM, ODM, EMS) are complicated. At the same time the existence
of complementarity between the different components is crucial in the computer industry.
This complementarity can only be realized through standardization and interoperability of
components (Economides, 1998). The industry strongly collaborates by annual revision of the
roadmap for the semi-conductor industry, which sets the research agenda and the future
development for the computer industry at large (interview De Jager 2008). Integration
upstream in the value chain is occurring in the semi-conductor industry throughout both
Europe and the world at large. Joint ventures and co-operation are the rule, also for traditional
competitors (European Commission 2004). Electronic products contain many intermediate
components, so that companies that are producing the intermediate components and
assembling companies choose to locate near each other in order to lower their inventory and
transport costs and decrease transportation time. In the electronic components industry, added
value is created by proximity advantages of having semiconductor and end-user equipment
manufacturers, like wired and wireless communications, automotive, consumer and industrial
equipment close by (European Commission, 2006; US Department of Labor, 2008).

4.2    Restructuring

Outsourcing and off-shoring of manufacturing production
The OEMs (Original Equipment Manufacturers) have gradually shifted their focus from
manufacturing (as their core competence in the past) towards outsourcing to contract
manufacturers. Their prime competences now are in managing the supply chain and in
contracting manufacturing partnerships. The labour-intensive manufacturing production
processes are nowadays mostly located in Asia (Mason et al. 2002; SOMO, 2005). The
buyer-supplier relationships are set to short-term manufacturing of products and components.
Because of a high rate of R&D and innovation, leading to the creation of many new products
and components, production and assembly manufacturing companies have to deal with high
uncertainties regarding their orders (portfolio). Since new products can be either a failure (no
more demand) or a success (much more demand), the contracts for product manufacturing
and assembly are always very short term. Just-in-time supply, variable orders, tight ordering
timescales and new demands in terms of higher product quality are influencing the buyer-
supplier relationship. Factory practices allow for flexibility, such that in the morning it is
decided how much will be produced that day and how long the working day will be, which


                                                                                               36
during the day depending on new orders can be adjusted. This has substantial implications for
employees who are uncertain about the length of their working days and whether they have to
work during weekends. Furthermore, employees often have little prospect of being long-term
employed (ILO, 2007). This partially also holds for production in Europe, particularly in the
new Member States.

Outsourcing and off-shoring trends by industry
Globalisation has become a major factor in the computing equipment manufacturing industry
(see e.g. US Department of Labor, 2008). In the beginning of the 1990s only less than 5 per
cent of all manufacturing of high-technologies was outsourced and vertical manufacturing
strategies were the rule. Since then many companies have outsourced a substantial part of
their activities towards Electronics Manufacturing Services (EMS). For the OEMs, only 25%
of production in the sector concerns ‘in house production’, while 75% is outsourced to
contract manufacturers (figures 2003; SOMO, 2005).

Not only has outsourcing become the rule, also the type of outsourcing has evolved during the
last decade. First, outsourcing was based on the opportunities to reduce costs or meet
specialized manufacturing for specific products on a contract-to-contract basis. Since
products grew more complex and product life cycles decreased over time, companies had to
increase their investments in capital equipment to keep up with the new manufacturing
requirements. A new form of outsourcing emerged allowing to enter new markets quicker and
more cost effectively by partnering with experienced companies,. This new form of
outsourcing in the manufacturing of electronics is more collaborative with partners sharing
strategic risks, characterized by a virtually synchronised supply chain (Accenture, 2003).

As regards the electronic components and the consumer electronics industry in Europe,
already most of manufacturing production has been moved to China during the last 15 to 20
years. The main benefits for off-shoring and outsourcing in electronic manufacturing are: to
reduce time-to-market and time-to-volume, to lower the operating costs, capital investment
requirement and other fixed costs; to improve inventory management and to have access to
world leading manufacturing technology, engineering and logistics capabilities (ILO, 2007).
Frost & Sullivan expect in their analysis ‘Trends in Electronic Manufacturing Services’ that
consumer electronics will be the main driver of outsourcing in the future, especially in
design. According to Frost & Sullivan OEMs will increasingly focus on R&D activities and
sales and marketing strategies and all other activities will be outsourced to EMS providers.
EMS providers will have to face increasing competition with strong demands, among which
effective value chain management, global presence as well as providing value added services
(Evertiq.com, 2008).

While in the electronic components and consumer electronics industries most manufacturing
production has been relocated to Asia, most of the higher value added and custom-made
manufacturing in the medical, optical and measurement devices industry still takes place in
Europe and is to a large extent conducted by SMEs.




                                                                                          37
5         Sector dynamics and the role of technological change, R&D
          and innovation

The computer, electronic and optical products sector is generally characterised by a short
product life cycle, strong global competition and a comparatively strong emphasis on R&D.
The semiconductor industry, for example, spends up to 20% of the annual revenues on R&D,
making up for around 70 % of the R&D value performed in the entire IT components sector.
Furthermore, other developments, like the increasing emphasis on consumer preferences and
the increasing miniaturisation of electronic products and components have led to different
dynamics in the R&D markets (European Commission, 2006; US Labor, 2008; ETEPS, 2007;
IPTS, 2007b; Cleff et al. 2007). In general, there is a clear gap in R&D between North and
South and between East and West of the EU. The Nordic countries spent huge resources on
R&D especially related to the telecoms equipment industry. The new Member States show a
lower R&D intensity, mainly because multinationals have located production but not their
R&D facilities in these countries. Within the EU, approximately 80% of the funding for the
private R&D expenditures comes from businesses (IPTS, 2007b).

While these general trends can be observed in the three sub-sectors alike, there are also
important differences.

In the office machinery and computers (NACE 30), the EU-25 spent EUR 2.3 billion on
private R&D activities in 2004, which equals 7.1% of the total EU-25 private investments in
the ICT sector8 (IPTS, 2007b). The research intensity of the sector (BERD/VA) increased in
the period 2000-2004, which can be explained by a shift to higher value added and more
technology intensive goods (IPTS, 2007b). Also the share of R&D staff in the total
employment of the sub-sector increased between 2002 and 2004, but the amount of R&D
investment per R&D employee increased only in Belgium. the Netherlands, Ireland, Sweden
and Denmark (IPTS, 2007b). Approximately 90 % of the European R&D is performed in
Netherlands, Germany, France, Sweden, Finland and United Kingdom (IPTS, 2007a) More
than 50% of the R&D expenditures is concentrated in the Netherlands, which hosts R&D
efforts of several large multinationals active in hardware and semiconductors (ETEPS, 2007).

In the IT Components (NACE 32.1) EU-25 spent EUR 6.8 billion on private R&D in 2004,
equalling 20.6% of the total EU-25 private R&D expenditures in ICT (IPTS, 2007b). This
sub-sector has the highest R&D intensity (35.6% BERD/VA) among the ICT sub-sectors,
which has substantially increased from 2000 to 2004. Especially the semiconductors industry
is very R&D intensive (15-20% of turnover is invested in R&D), which is mainly due to the
permanent request for customisation and the medium- and long-term research on continuous
improvement of materials (IPTS, 2007b). In addition, the semiconductors industry has a
relatively high share of high educated employees. In the semiconductors industry many
production and testing activities are off-shored and outsourced. This is of increasing
importance for R&D activities as well. In the semiconductors industry R&D is extremely
closely linked to production, which could imply that along with the off-shoring of production
towards Asia, R&D activities might also be off-shored to that region. It is expected that
mainly high-tech and research intensive activities like nanotechnology and photovoltaics will
be important technological niches for the EU (IPTS, 2007b). The semiconductors industry is
mainly concentrated in Germany, the United Kingdom, France and Italy (IPTS, 2007b).

8
    ICT sector is here defined as NACE 30, 32, 33, 64 and 72


                                                                                          38
In the radio, TV and communication equipment sector (NACE 32.2 and 32.3) EUR 6.5 billion
is spent on private R&D in EU-25 in 2004. This equals 19.6% of the total EU-25 private
expenditures in ICT. This sub-sector is R&D intensive (BERD/VA), although its research
intensity declined from 32% in 2000 to 20.3% in 2004. Europe has a strong tradition in the
telecoms equipment sector, with the presence of several major international players (Alcatel,
Ericsson, Siemens, Nokia), who have seen a decrease in added value in the beginning of this
century because of the dotcom bubble and the large expenditures for spectrum auctions for
the 3G spectrum. As a result, also the R&D investments in this sub-sector have gone down
since 2000 (IPTS, 2007b). The multimedia sector is quite different, with European players
being strong in the premium segment, but weak in the mass market. This sub-sector is very
R&D intensive and, despite many manufacturing activities have been off-shored because of
cost reasons, EU-25 remains strong in R&D intensive niches. Nevertheless, a reverse trend is
the increasing location of third country multimedia producers’ R&D in the EU in order to
customise their products to European markets (IPTS, 2007b). Approximately 90% of the
European R&D is performed in Germany, France, Finland, Sweden, United Kingdom, Italy
and Austria (IPTS, 2007a). Almost 50% of the European private investments in R&D are
concentrated in Germany and France (ETEPS, 2007).

The medical and optical equipment sector (NACE 33) shows a high R&D intensity when
compared to the manufacturing average, but it is slightly below the average of the ICT
manufacturing. R&D expenditures are mostly concentrated in France, Germany and Italy,
though with the highest R&D intensities occurring in Denmark, Finland and Norway. Over
90% of European private R&D in 2003 is performed in Germany, France, United Kingdom,
Italy, Sweden, Denmark and the Netherlands (IPTS, 2007a). The electronic measurement
instruments industry (NACE 33.2/3) in the EU-25 spent EUR 5.4 billion in 2004, equalling
17.4% of the total EU-25 private investments in ICT.

As a global trend, a growing difference is observed between investments in R&D in Asian
countries like Taiwan and South-Korea with high R&D investments, and Europe where
investment in R&D is lagging behind, with the EU accounting for only 8% of total world
investments in the semi-conductor industry (European Commission, 2006b). This trend risks
the very existence of the critical manufacturing infrastructures in Europe (European
Commission, 2006b). Other R&D intensity9 figures (IPTS, 2007b), however, show that the
EU has a higher R&D intensity in semiconductors, in computers and office equipment, and in
electrical components than other non-EU countries. Only for electronic equipment the R&D
intensity lags behind compared to non-EU (IPTS, 2007b). European ICT companies claim –
when asked in the Community Innovation Survey (CIS-3/4) - that lack of finance and high
costs of innovation are barriers to innovation. However, customer wishes are a stronger
incentive to innovate in the electronic, computing and optical industry compared to most
other manufacturing sectors (Cleff et al., 2007).

Education and skills in relation to the sector’s R&D and innovation profile
The computer, electronic and optical products sector is characterized by technological
innovation that drives much of the industry’s production, requiring a high proportion of
engineers, engineering technicians, and other technical workers who carry out extensive
research and development (e.g. US Department of Labor 2008). The volume of students in
Computer Sciences and Electronic Engineering disciplines is generally judged insufficient to
satisfy projected labour market demand. Eurostat figures indicate a shortfall of at least
100,000 graduates for the year 2004-5, whereas this figure is most probably even a significant
9
    R&D as a percentage of sales.


                                                                                           39
underestimation (EU ICT Taskforce, 2006). Some countries have specific education
programmes targeted at increasing education related to the information industries, in order to
increase the skills of future employees in the computer manufacturing (and also other related
sectors). In Finland, for example, such a programme existed between 1998 and 2002.

A sizeable 33% of all employment in the computer, electronic and optical products sector is
high-educated, yet with considerable differences bewteen Member States as well as between
the EU-15 (36%) and the NMS (20%). More than half of the employed are medium-educated:
47% in the EU-15 and 71% in the NMS. Low-educated form a minority in the workforce,
with 17% in the EU-15 and only 9% in NMS, which is also shrinking quite rapidly (minus
5% points over the peruiod 2000-2006). In the office machinery and computer industry
(NACE 30) 17.6% of the employees are higher educated; in radio, television and
communication manufacturing (NACE 32) over 25% of the employees are higher educated
(Wintjes and Dunnewijk, 2008). The semiconductor industry has a very high share of
researchers in their staff and employees in general have advanced engineering qualifications
(IPTS, 2007b). Also the medical, precision and optical instruments sector (NACE 33) has a
very high share of high educated employees. Nevertheless, a shortage of employees with high
skills in the future is expected as there are not enough students in optics, also because there
are not enough education programmes training students in optics (communicated by Prof.
Schelkens, workshop 15 September 2008).

One of the recommendations at the end of 2006 of the ICT Task Force set up by the European
Commission is that Europe needs to urgently increase employability e-skills.




6      Trade, globalization and international competition

6.1    Trade and international competition

International competition in the computer, electronic and optical products industries is strong,
with global players setting the stage and with off-shoring (relocation) and outsourcing of
especially manufacturing production being a pervasive phenomenon. At the same time, the
degree of collaboration and cooperation in the sector is high, organized and orchestrated
along global value chains. In recent years these value chains have gradually evolved into
global value networks.

The international competitive playing field has changed strongly over the last decades. In the
1990s, OEM companies still predominantly competed against each other, with integrated
value chains being the norm and with outsourcing being limited to certain parts of product
manufacturing. In consumer electronics, for instance, the traditional strong role of the
consumer electronic manufacturers has been diminishing, with service and content providers
having increased their market power, and with new and highly specialised markets for
electronic equipment emerging, e.g. in automotive. More generally, the emergence of EMS10


10
   EMS companies are mainly based in Northern-America, while OEM companies have been traditionally
located in Northern-America and Europe, but nowadays also in Japan, South Korea, Taiwan and increasingly


                                                                                                     40
and ODMs has led international competition in the computer, optical and electronic product
manufacturing industries to become more fragmented, increasingly taking place in
specialised sub-sectors. One of the more recent trends is the new competition between ODMs
and their own clients (OEMs) as well as EMS companies starting to enter the ODM markets
by designing their own products (SOMO, 2005; OECD, 2007).

Particularly China has been on the rise as a global production platform. More generally,
Asian companies have been increasing their investments in R&D and trying to provide higher
value added, hence directly and more competing with European firms. On the lower value
added range, low-wage countries compete for attracting the product manufacturing, where
Philippines, Costa-Rica, Mexico and China compete with the new EU Member States, the
latter having higher labour costs, but also having closer proximity to the European markets.
Seen from a global perspective, most competition for European firms in the computer,
electronic and optical products industry stems from the US and East Asia. In medical and
optical equipment, the EU faces strong competition from mainly the US, but increasingly so
from China. In consumer electronics, the EU faces very strong competition from Asia,
particularly from Japan, Taiwan and South Korea. In the electronic components industry,
competition is particularly strong from the US (OEMs and EMS companies), Taiwan
(ODMs) and China (assembly platforms).

Exports in the computer, electronic and optical products industries totalled almost EUR 500
billion in 2006. The vast majority of total exports is accounted for by the EU-15 countries.
The new Member States, however, show export growth figures for the period 1995-2006 of
22.6%. With EUR 595 billion imports in the computer, electronic and optical products sector
exceed exports by more than EUR 100 billion. Also here growth figures are strongest in the
new Member States.

Table 6.1 Exports and imports computer, electronic and optical products industries,
1995-2006
                                    Exports                                  Imports
                                  2006           1995-2006                 2006           1995-2006

                           Million Euro                  %          Million Euro                  %
EU                              478 833                10.5              595 794                11.4
EU-15                           436 330                 9.9              551 948                11.1
NMS                              42 503                22.6               43 846                16.2

Source: Eurostat/TNO

EU is thus a net importer of electronic components and products, with an increasingly
negative trade balance. Global trade in ICT goods was increasing much last decade, and
accounted in 2000 for almost 17 % of all merchandise trade (OECD, 2007). In the period
2000 and 2003 the manufacturing and trade of electronic goods showed a sharp decline; after
2003 trade in electronic components and products recovered. The last years there was a high
increase in net trade, in particular with China (European Commission, 2006d).

Although overall the EU has a negative trade balance in computer, electronic and optical
products with the rest of the world, some countries do have a positive trade balance as is
described in Table 6.2. These winning countries are Luxemburg, Finland, Ireland, Sweden,

also in China. ODM companies are mainly located in Taiwan and China, while the low value added product
manufacturing locations are in China, Philippines, Costa Rica, Mexico and Malaysia.


                                                                                                   41
Estonia, and Hungary. The upcoming countries (Germany, Czech Republic, and Poland) have
a negative trade balance with the rest of the world but a positive trend over the period 1995-
2006. The rest of the EU countries are retreating, they face a negative trade balance and the
trend is also negative.

Table 6.3 describes the relative comparative advantage in the EU. Relative comparative
advantage compares the relative contribution of sector x to the comparative advantage of the
national economy with other sectors. A comparative advantage of 0 means that the
comparative advantage of the sector equals the average of the comparative advantage of the
entire national economy. A negative comparative advantage indicates that the contribution to
economic performance is less relative to other sectors. As we can see in table 6.3, this is the
case for the computer, electronic and optical products sector. But for Luxembourg, Finland
and Estonia it is the other way around. Revealed comparative advantage in these countries is
relatively high, as in Ireland and Hungary, even though they are losing momentum.

Table 6.2 Trade balance computer, electronic and optical products industries,
1995-2006

                                      Trade balance 2006                                  1995-2006
                                             Million euro               Total abs. change 1995-2006
EU                                              -116 961                                    -69 469
EU-15                                           -115 618                                    -71 703
NMS                                                -1 343                                     2 234

Winning                                             19 230                                       9 736
Losing momentum                                          0                                           0
Upcoming                                            -2 312                                       7 168
Retreating                                        -133 879                                     -86 373
Source: Eurostat/TNO

Table 6.3 Revealed comparative advantage computer, electronic and optical products
industries, 2006
                                  Revealed comparative advantage                           1995-2006
                                                           2006                     Total abs. change
EU                                                           -22                                   -5
EU-15                                                        -24                                   -8
NMS                                                           -2                                   48

Winning                                                        21                                     37
Losing momentum                                                14                                    -17
Upcoming                                                      -39                                     29
Retreating                                                    -27                                    -10
                                Concentration index >100            Concentration index <100
Growth                          Winning:                            Upcoming:
                                Luxemburg, Finland, Estonia         Greece, Portugal, Spain, Czech
                                                                    Republic, Poland, Slovakia


Decline                         Losing momentum:                    Retreating:
                                Ireland, Hungary                    Belgium, France, Germany, Italy,
                                                                    Netherlands, Austria, Denmark,
                                                                    Sweden, United Kingdom, Lithuania,
                                                                    Slovenia
Source: Eurostat/TNO




                                                                                                      42
6.2    Trade issues of relevance and importance to the sector

The computer, electronic and optical products sector is a strongly globalised and dynamic
sector, characterised by high levels of trade and relatively low trade barriers. Existing trade
barriers are mainly non-tariff barriers, particularly technical barriers such as technical
regulations, standards and conformity assessment systems. Different laws and regulations and
the lack of protection of IPR in some countries also remains an issue in international trade.
Due to the relative low weight of components transport costs of electronic components and
electronic consumer goods are relatively low. Even for experienced companies operating
globally, the diversity of technical requirements, certification schemes and lack of
transparency can be a significant burden in operating at a global scale. The fact that the EU is
not a single market in all dimensions (cf services) adds to transaction costs both within the
EU and internationally.

Developing country exporters fear that increasingly the high product and process-related
requirements of industrialised countries, such as environmental and health requirements,
although well-intentioned, are becoming technical barriers to export their products to the
European markets. At the same time, the attention in Europe itself has moved from working
conditions in manufacturing in Europe to working conditions in developing countries.
Particularly NGOs have been able to draw attention to the existence of child-labour, poor
health conditions at the work floor, and the importance of collective action and trade-unions
(see CAFOD, 2004).

6.3    Outsourcing and offshoring

Since the 1990s the OEMs have outsourced important parts of their manufacturing production
processes (production plants) to predominantly East and South-East Asia (for details also see
section 4.2). In 2003 only 25% of production still concerned ‘in house production’, while
75% had been outsourced to Contract Manufacturers (EMS and ODMs). Cost advantages
(lower wages, lower social costs, higher number of working hours), ample availability of
labour, and future market potential have led European firms to relocate their production to
elsewhere, predominantly Asia, usually supported by favourable location and tax incentive
schemes provided by the receiving countries and/or regions. According to ESIA (2005), for
instance, setting up a leading-edge model fab in China, South Korea or Malaysia would yield
a net income flow of more than a factor 2 higher than the same fab in Germany or other
Western European locations.

Offshore outsourcing to Asia has particularly been strong in consumer electronics. The
increased off-shoring of production facilities appears to have already followed by a shift of
R&D investments from Europe to Asia (IPTS, 2007a). In electronic components, Asian
companies have been increasingly investing in R&D and in design, some of which has
materialized in Europe. European companies still tend to spend most of their R&D in Europe.
Contrary to the electronics and electronic components sectors, there is less outsourcing in the
measurement, optical and medical electronic devices industry. The industry is typically
characterised by many different niche markets, served by SMEs.

The advantages of Europe with its highly skilled workforce, strong research infrastructure
and sizable internal market has in general not seemed to outweigh these favourable
conditions in these Asian countries. There are some exceptions though. During recent years
the new EU Member States have emerged as a location for electronics manufacturing, with a



                                                                                             43
growth of production networks in the region. Following the burst of the 2001 technology
bubble, many establishments in countries like Hungary and Czech Republic where set up to
cut costs. Central and Eastern Europe are particularly popular in lower added value product
manufacturing, which are characterized by low levels of R&D investments and a low share of
R&D personnel compared to the old Member States (IPTS, 2008; Reed Business Information,
2008). New recently emerging externalisation strategies include the trend towards
collaborative strategic cooperation between experienced partners in a synchronised supply
chain. Another trend is locating R&D close to production (“the fab is the lab”).

Box 2. Defining and measuring relocation and outsourcing
One of the biggest challenges when analysing and discussing offshoring and outsourcing is the
definitional issue of what precisely is meant and - closely related – how to measure the phenomenon.
Outsourcing covers activities previously carried out in-house sourced to third parties whether abroad
or in the home country. Offshoring in its strictest sense relates to activities being discontinued in the
home country and transferred to a location abroad managed within the same entity or by an affiliated
legal entity (OECD, 2007). Frequently, the political debate mixes the above three and also discusses
job losses due to restructuring unrelated to offshoring under the same label. Furthermore, the political
debate is fuelled by estimates which are the main source of evidence in the absence of hard statistics.
Two broad sources on job relocation have as a result emerged: private consulting estimates and press
monitoring estimates (Van der Zee et al., 2007). While consulting estimates have severe limitations
(ibidem), the estimates collected by press monitorings such as the ERM are more reliable. The most
valid data, however, systematic official statistics on the employment impact of relocation, are not
collected anywhere in the world today. As a result, academics who nevertheless want to use official
statistical data resort to proxies of indicators of relocation activity, such as trade data, FDI flows and
input–output tables (Van der Zee et al., 2007). However, these indicators only measure the indirect
effects of relocation and are affected by a number of other factors making hard conclusions difficult to
draw.




7      Regulation

The sector operates within an established legislative framework that includes, amongst
others, product safety, energy labelling, minimum efficiency requirements, eco-design and
waste. In general, the computer, electronic and optical products sector seems to be less
strongly affected by regulatory measures and tax laws than other sectors in the EU.
Moreover, the overall importance of regulation on innovation in the sector appears less than
in most other sectors (Cleff et al., 2007). This does not imply that regulation is not important.
Strong labour, social, environmental and health regulations – while having a positive societal
impact - also come at a cost affecting competitiveness. Strong regulation, for instance on
environmental aspects, is however not always detrimental to competitiveness, but could also
help in creating competitive edge (first mover advantages, strong home market). Most of the
prevailing regulation in the labour, social, environmental and health domain is still
formulated at national level, even though the EU gives some policy guidance, for instance by
indicating the margins within which Member States are free to formulate their own policies.
In some sub-sectors such as irradiation, electromedical and electrotherapeutic equipment
products have to abide to more national and European legislation than other sectors, as many
medical applications require high standards concerning reliability and health.



                                                                                                       44
Where product regulation is concerned, EU regulation is generally more direct in its
application, influence and impact European-wide. For the computer, electronic and optical
equipment sector, four recent directives are of particular importance: the Waste Electrical and
Electronic Equipment (WEEE), the Restriction of Certain Hazardous Substances (RoHS), the
2005 Energy-using Products (EuP) and the REACH directive. Other relevant directives
include Directive 2004/108/EC relating to electromagnetic compatibility and the low voltage
Directive 2006/95/EC.

The 2003 EU directives Waste Electrical and Electronic Equipment (WEEE) and Restriction
of Certain Hazardous Substances (RoHS) together mandate the recycling and restriction of
hazardous materials in electronic and electric equipment. Producers are held responsible for
taking back and recycling electrical and electronic equipment. Certain heavy metals are
required to be substituted (like lead, mercury, cadmium, and hexavalent chromium), as well
as flame retardants (polybrominated biphenyls (PBB) and polybrominated diphenyl ethers
(European Commission, 2002a; 2002b). Medical devices, control and monitoring equipment
are exempt from the RoHS.

The Energy-using Products (EuP) directive of 2005 aims at reducing the use of energy in
products. The directive does not introduce directly binding requirements for specific
products, but sets the requirements and criteria for environmentally relevant products, like
computers and other electric and electronic containing products. Products that fulfil the EuP
requirements will benefit both business and consumers, by facilitating free movement of
goods across the EU and by an enhancement of product quality and environmental protection
(European Commission, 2007). That the EuP directive is of relevance to the sector is shown,
for instance, by the fact that the total energy and fossil fuel input in the production of a
desktop computer or a memory chip are much higher than in other manufacturing sectors.
The ratio of fossil fuel use to product weight is 11, which is much larger than the factor of
around 1-2 for many other manufactured goods (Williams, 2004).

The 2007 REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals)
directive has a direct consequence for the computer, electronic and optical equipment sector
in the EU, as several - sometimes hazardous - chemicals are part of the manufacturing
process. REACH which applies to new and existing chemical substances has been adopted in
2007 and requires firms to test around 30,000 existing substances over the coming years.
While this will pose additional costs for industry, it will reduce current testing requirements
for new substances to encourage innovation (DG ENTR, 2007). However, this view was not
unanimously shared and intensive discussions and negations with industry preceded the
adoption of the legislation. Fears that chemical activities would relocate to locations with
laxer regulation were brought forward against the legislation. As a result the legislation was
adapted to minimise the risks of an increase in non- productive costs, of cartel agreements
and of disproportionate exposure of SMEs. Consequently the CCIC established in its 2007
report that the REACH implementation costs appear acceptable (EESC, 2007), although
previously concerns over the levels of direct and indirect costs were raised (CCIC, 2005). The
crucial factor to ensure a level playing field for the European industry is the implementation
of the REACH regulation on imports. Due to concentration thresholds and volume
limitations, not all imports fall under the REACH legislation, potentially putting the EU
industry and mainly SMEs in a disadvantageous position (EESC, 2007). The impact on
employment however is difficult to foresee.

In July 2007 the revised European Parliament and Council Directive 2004/108/EC relating to
electromagnetic compatibility came into force, replacing an existing Council directive on this


                                                                                            45
subject. The recently re-codified low voltage Directive 2006/95/EC in December 2006 seeks
to ensure that electrical equipment within certain voltage limits both provides a high level of
protection for European citizens and enjoys a Single Market in the European Union. The New
Approach to technical harmonisation {COM(2007)37}, which aims to iron out product-
related legislative weaknesses that prevent consumers and enterprises from fully exploiting
the benefits of the Internal Market.



8      SWOT

SWOT analysis is a tool in management and strategy formulation, used to evaluate the
Strengths, Weaknesses, Opportunities, and Threats involved in a project, business venture or
– as in this case – a sector, the latter being defined within a well-described geographical
entity. The aim of a SWOT analysis is to identify the key internal and external factors that are
important to achieving a particular objective or set of objectives. Strengths and weaknesses
are internal factors that create or destroy value. For a company these can include assets, skills
or resources that a company has at its disposal, compared to competitors. Opportunities and
threats are external factors that create or destroy value. They emerge from either the company
dynamics of the industry/market or from demographic, economic, political, technical, social,
legal or cultural factors (STEEP or DESTEP, see also chapter 9). When applied to the sector
level, SWOT has a similar meaning, albeit on a higher, more aggregated level. The SWOT
analysis presented in Table 8.1 is the result of an intensive workshop discussion which was
subsequently validated and amended in two external workshops, including the final workshop
in Brussels (step 10 in the methodological framework).
In general, the strengths of the sector relate to a strong collaborative capacity in regard of
future developments and innovations and a strong science base, which taken together result in
Europe in a high capacity for R&D and design. Furthermore, several strong brand names
exist in Europe, which warrant strong value added generative capacity. Threats related to
these strong points are the increasing efforts of Asian companies in R&D and their move
towards higher value added and doing the design themselves. This forces the EU to increase
its investment in R&D in order to stay competitive. Weaknesses in EU manufacturing in
computer, optical and electronic products are the high cost of low skilled labour, the lack of
EU-job mobility, the lack of standardization between EU-countries and the lack of a single
European market. Opportunities include the growing health and medical equipment sector in
which Europe has a relative strong position, just as the high end market segments, in which
companies provide high value added, providing custom-made products in low volume.




                                                                                              46
Table 8.1 Analysis of Strengths, Weaknesses, Opportunities and Threats - Computer,
Electronic and Optical Products Sector
Strengths                                               Weaknesses
      •   Strong science base across sub-sectors           •   Low skilled European labour uncompetitive
      •   High performing groups (Eindhoven-                   (high wages and labour costs)
          Leuven; several groups in Germany, etc)          • Development activities of R&D moving
      •   Strong ‘surrounding ’ICT services                    with production to Asia
      •   Strong base for open innovation                  • Resources, particularly R&D, accumulated
      •   High purchasing power in home market                 in few large firms
          potential for lead market and market for         • Weak IPR in third countries
          high end products                                • Short development / product cycles increase
      •   Single EU market scale attractive for firms          competitive pressures
          to locate                                        • Lack of standardisation / competition
      •   High management capacity to manage large             between countries (regulation)
          orchestrator firms in sector                     • Fragmented research in national EU
      •   Strong brands creating value added                   markets
                                                           • Barriers to EU job mobility
Opportunities                                           Threats
      •   High value added products require strong         •   Asia moving from production to R&D,
          design / creativity / product development            design & manufacturing location
          competences at which European firms are          •   European R&D relocating with production
          good at                                              to Asia
      •   Megatrends of energy/environment and             •   Decrease of high volume / low profit
          security as future growth markets – also             segments undermining industry – impact on
          driven by regulation                                 high end segments
      •   Digitalisation of production and                 •   Concentration of large firms – globally
          consumption (digital media, e-health, e-             mobile
          democracy)
      •   Health and medical equipment (e-health,
          robots, related also to ageing) and digital
          media as growth markets
      •   High-end market segments as growth
          markets – white goods / audio / etc.
      •   Short product life cycles expand markets




9         Drivers

9.1       Identification of sectoral drivers: methodology and approach

The methodological framework as defined by Rodrigues (2007) serves as the starting point
for the identification of drivers. Rodrigues identifies three main driver categories: economic,
technological and organizational drivers, with the economic dimension representing the main
trends in demand and supply, the technological dimension covering the main trends in
process and product innovation (including services) and the organizational dimension
representing main trends in job functions (conceptual, executive). The Rodrigues’ approach
in principle enables the identification of drivers, and especially so at the meso (sector) and
micro (firm or company) level. The search and identification procedure of drivers itself is less


                                                                                                  47
well defined, however. Implicitly it is assumed that expert opinion and desk study are
sufficient tools to come up with a relevant and plausible set of drivers at the sector level.
During the first stage of the project, a methodological tool (approach) has been developed to
facilitate and help the identification and further delimitation of drivers, to arrive at a set of
key drivers. Apart from expert opinion mobilised and managed as discussion panel (in a
similar manner as a SWOT analysis is usually organised), this approach strongly builds on
the findings of existing foresight and other future studies. By consistently linking the search
for drivers with the findings in existing foresight and other future studies, a more coherent
and all-embracive methodology to finding sector-specific drivers can be deployed. This so-
called ‘meta-driver’ approach of identifying main sectoral drivers starts from a more generic
list of meta-drivers derived from a literature survey, and subsequently in a step-wise manner
delimits the drivers to a set of most relevant and credible drivers. It does so by combining
adequate expert (sector) knowledge in a panel setting. By subsequently asking the expert
panel to score the different drivers on a range of characteristics, including relevance,
uncertainty, and expected impact (similar to a SWOT procedure), a corroborated and
conclusive list of sector-specific drivers can be derived. The meta-driver approach hence
enables filtering out in a systematic and consistent way meso and possibly micro (sector-
specific) as well as the macro (economy-wide) trends and developments judged relevant and
important to the sector, directly and indirectly.
The meta-driver approach includes the following five steps:
Step 1. Drawing up of a list of relevant generic or meta-drivers based on literature review and
expert knowledge (check-list: rows)
Step 2. Designing a list of key questions in order to identify the sector relevance and other
properties of meta-drivers at sector level (check-list: columns)
Step 3. Filling in the check-list matrix: which meta-drivers do matter most for the sector?
Step 4. Which drivers do matter most for jobs and skills?
Step 5. Does the tailor-made list herewith cover all relevant sectoral drivers, i.e. are there any
sector-specific drivers missing (check on completeness)
Arguments in favour of the use of the ‘meta-driver’ approach are:
   •   The ability and opportunity to use the rich potential of a multitude of already available
       studies on drivers, determinants of change and key trends
   •   Circumventing the risk of a too narrow focus on the sector per se while
       acknowledging sector-specificity, and avoiding the risk of analyzing sectors as if they
       were isolated (cf the difference between ‘general equilibrium’ and ‘partial
       equilibrium’ approaches)
   •   Guaranteeing overall consistency, coherence and completeness, as well as warranting
       a same point of departure important across lots/sectors – i.e. a way of integral
       assessment, making sure that all important factors are systematically taken on board.
An alternative and second way to arrive at a list of main sector-specific drivers of change is
to start with a SWOT and subsequently translating the Opportunities and Threats part into
sector-specific drivers. The SWOT is used as a tool to verify and check the resulting list of
drivers. By combining the results of both the “from meta-drivers to sector-drivers” and the
“from SWOT to sector-drivers” exercises a complete and consistent list of sector-specific
drivers can be derived.



                                                                                               48
9.2      Sectoral drivers

In the following Table 9.1 the main drivers have been ranked. The main criteria for
identifying these main drivers have been relevance (i.e. significance to the sector as such),
uncertainty and expected impact on the sector (i.e. significance to the employment situation
of the sector). Table 9.2 presents all drivers that have been considered in the scoring exercise.

Table 9.1 Main drivers in the computer, electronic and optical equipment sector
Driver                              Explanation
Outsourcing and off-shoring         Substantial impact expected from this driver on levels and
                                    composition of employment as manufacturing moves to low(er)
                                    wage countries and to emerging markets; the skills need will shift
                                    towards managing outsourcing / offshoring; as well as towards
                                    abilities / skills to work in (national and international) value
                                    networks
Increased market segmentation       Move towards high value segments affects composition of
                                    employment with design and engineering becoming relatively
                                    more important functions
Global / regional production        Management of value networks important, but mostly already
networks                            there and implemented        limited future impact on employment
                                    and skills expected
Higher income per capita            Increasing demand for high value added products; overall affect
                                    on employment limited but more skills in high end segments
Ageing                              Adaption to changes in consumer demand – increasing demand
                                    for products designed for elderly people and medical equipment;
                                    but no impact on levels of employment / skills expected
Life style changes                  Consumer demand key driver for sector, increasing
                                    individualisation leading to market segmentation
Internet                            Driver for increased demand for hardware and integrated services
                                    in consumer segment
New business models                 Large OEMs becoming orchestrator of supply chain with little
                                    manufacturing affecting levels, composition of employment and
                                    skills required
Emerging economies driving          Increasing demand for computer, electronic and optical goods in
global growth                       developing countries as incomes will increase, esp. with the rise
                                    of middle income classes
Shortening of product life cycles   Leading to a higher production volume that will lead to either
                                    more employment, or a productivity increase of employees
                                    (working better, smarter, longer or harder)
Miniaturisation                     Will ask different skills (e.g. in the field of nanotechnology) of
                                    employees and possible different assembly technologies that
                                    require different skills
Recycling                           Increasing shift of the responsibility to the manufacturer to retake
                                    and recycle products, which will lead to increase of risks for
                                    employees that have to the deal with the hazardous materials in
                                    the products
Substitution of hazardous           Will reduce the risk for employees when working in
materials                           manufacturing of electronic and optical equipment




                                                                                                     49
Table 9.2                             Assessment of main drivers based on the meta-driver approach
                             Driver                            Is this driver How relevant How uncertain          Are           Are           Are         Short,         Are           Are
                                                                relevant for is this driver is this driver substantial      substantial   substantial   medium or   substantial   substantial
                                                                the sector? for the sector? for the sector?    impacts        impact        impacts      long run   differences   differences
Category




                                                                                                            expected on expected on        expected     impact?*     expected      expected
                                                                                                             the levels of employment         on                     between       between
                                                                                                            employment? composition?      new skills?               (groups of)       sub-
                                                                                                                                                                    countries?     sectors?
                                                                  Y/N        Scale 0-10     Scale 0-10         Y/N            Y/N            Y/N        S   M   L       Y/N           Y/N
                             Ageing - Adapt to the market
demographic




                             demands of an ageing and               Y             8              1              N              N              N             x   x       N             Y
  Ageing /




                             more diversified society
     s




                             Ageing – declining labour force        Y             5
                             Population growth (birth and
                             migration)
                                                                    Y             2
                             Income per capita and
   Economic




                             household                              Y             9              2              N              Y              Y             x   x       Y             Y

                             Income distribution
                                                                    Y             3
                             Outsourcing & offshoring               Y             9              1              Y              Y              Y         x   x   x       Y             N
                             Increasing global competition          Y             9              1              -              -              -         x   x   x       N             N
                             Emerging economies driving
           Globalisation




                             global growth (new market              Y             8              3              N              N              N         x   x   x       N             N
                             demand, especially BRICs)
                             Global / regional production
                             networks (dispersed production         Y             8              2              N              N              N         x   x   x       N             N
                             locations, transport)
                             Counter-trend regionalism /
                             protectionism
                                                                    Y             6              6              Y              Y              N         x   x   x       Y             Y
                             Increasing market segmentation
           Cultural values




                             (tailor made production, mass          Y             9              2              N              Y              Y         x   x   x       Y             Y
                             customization)
                             Lifestyle changes                      Y             8              2              N              Y              Y         X   X   X       Y             Y
                             Increasing demand for
                             environmentally friendly               Y             5              4              N              N              N         x   x   x       N             N
                             products




                                                                                                                                                                                          50
                               Advances in IT impacting on
   Technology and innovation
                               organizational structures & new   Y   8        1              Y     -   -   x   x   x   N   N
                               business models
                               Internet changing production
                               and consumption patterns (e-      Y   8        3              N     Y   Y       x   x   Y   Y
                               business; etc.)
                               New types of work organisation
                               (teams-based, sociotechnique,     N   -
                               etc.) (see advances IT)
                               New/additional value-added
                               services (see Internet driver)
                                                                 N   -
                               Other (sector specific)           N   -
                               Availability (and price
 resources




                                                                 Y   3
  Natural




                               developments) of oil and energy
                               Availability and price of other
                               natural resources                 Y   3

          Trade and market liberalisation
          (national level)
                                                 Y             3
          EU integration – deepening
          (single European market etc.)
                                                 Y             3
   Institutional / Political




          EU integration – broadening
          (bigger domestic market)
                                                 Y             2
          Quality of institutions (judiciary,
          transparency, lack of corruption,
          viable business climate,               Y             4
          absence of structural rigidities,
          stability of legal framework)
          Labour market / health
          regulation
                                                 Y             4
          Environmental regulation
          including energy efficiency
                                                 Y             6               4             N     N   N   x   x   x   N   N
          Security and safety regulation         Y             2
Note: * Short = 0-3 years; medium = 3-7 years; long = > 7 years. All three categories may apply.




                                                                                                                               51
         Part II.

  Future Scenarios and
      Implications for
Jobs, Skills and Knowledge




                             52
Part II. Future Scenarios and Implications for Jobs, Skills and
Knowledge - Guide to the reader

Part II presents the scenarios and their implications for jobs, skills and knowledge. It reflects
steps 4, 5 and 6 of the common methodology. The contents of part II are as follows: Chapter
10 describes the structure and highlights the content of the four main scenarios (step 4). For
each of these scenarios plausible yet different assumptions have been made as to how the
main drivers of change will develop and add up to different states of the future. In subsequent
steps the implications of the scenarios for jobs and skills are analysed. In order to facilitate a
translation of these implications to the job function level, first a workable job function
structure is proposed in Chapter 11. This structure is based on the functions as they appear in
Eurostat’s Labour Force Survey and further elaborated. Chapter 12 discusses the main
implications of the scenarios in terms of future employment volumes by job function (step 5).
Chapter 13 assesses the implications of scenarios for future skills and knowledge needs by
job function. It translates the implications of the scenarios for skills and knowledge by
function (step 6).




                                                                                               53
    10 Scenarios

    10.1 Overview of scenarios and main underlying drivers

    Figure 10.1 presents four different scenarios and their underlying drivers for the computer,
    electronics and optical products sector (see further below). The scenarios which were
    specifically constructed for and used in this study are based on a clustering of relevant drivers
    identified in part I.

    Figure 10.1 Drivers and scenarios computer, electronics and optical products sector

                                                 Endogenous, sector-specific drivers:
                                                 - Trade and market regulation
                                                 - Societal and cultural environment
                                                 - Innovation policy

                                                 -      Open and multilateral trade regulations
                                                         - Open society and economy
                                                          - New and innovative spirit
                                                      - Leading-edge EU innovation policy

Exogenous drivers:
- Outsourcing &         Continuing                                                                 Continuing, Europe
   offshoring
                                                                                                   orchestrating
                                                        Hi-Wi-Fi                 High-end
-      Globalisation
       and global       Strong global                 For Everyone               Hi-Wi-Fi          Strong global
       competition      competition and               (Scenario II)             (Scenario I)       competition and
                        globalisation                                                              globalisation
-      Market
       segmentation     Mass consumption                                                           Mass customisation

-      Demand
       (lifestyle, e-   Mixture of traditional                                                     Individualisation,
       sales)           and modern lifestyles                                                      convenience, tailor-
                                                         Fading                Footloose and
                        and households                                                             made
-      Technology: IT                                     Away                   Offshored
       automation and                                 (Scenario IV)            (Scenario III)
       Internet         Modest roll-out and                                                        Strong roll-out and
                        adoption                                                                   adoption
-      Income
                        Low growth                                                                 High growth
                                                        -      Selective border protection and
                                                                  bilateral trade regulation
                                                            - Closed society and economy
                                                                - Conservative spirit
                                                  -         Fragmented ‘follower’ –type national
                                                                      innovation policy

    The scenarios are construed to ‘scan’ the future, and are for the purpose of this study used to
    assess the impact of future developments on jobs, skills and knowledge. It is important to
    understand what scenarios can deliver and what not. Scenarios depict plausible futures and
    might reveal possible paths of development towards these futures. They are neither


                                                                                                                 54
predictions or forecasts, nor wishful pictures (‘dreams’, ‘crystal ball gazing’) of the future.
Grounded in existing data and trends, scenarios are derived in a logical and deductive way,
with different and sometimes opposing presumptions about how key drivers might develop,
resulting in inferences about plausible, i.e. credible and imaginable, futures.

In drafting the scenarios, a clear distinction has been made between exogenous and
endogenous drivers; the horizontal axis in the figure represents the relevant exogenous
drivers, whereas the vertical axis represents the relevant endogenous drivers. The main
difference between the two categories of drivers is the scope and ability for direct influence.
Exogenous drivers are drivers that form a “given” for the sector without much room for
influence for/by individual actors drivers. Endogenous drivers are drivers that can be
influenced at the sector level, for instance by national or European policy-making. Only those
drivers that received the highest ranking - a score between 8 to 10 on a scale of 0 to10 (see
Chapter 9) - have been taken into consideration.

The scenarios apply to the computer, electronic and optical products broadly defined. The
distinction between the three sub-sectors - which is primarily data-driven as the categories
conform to the available Eurostat NACE categories - has been used to describe and analyse
past developments, trends and the current state-of-play. A more appropriate analytical way to
look at distinctive future developments in the computer, electronic and optical products sector
is to differentiate between electronic components and computers, communication equipment
and consumer electronics on the one hand, and optical and medical products on the other.
Where applicable, relevant and useful, reference will be made to this distinction in the next
sections. Elsewhere, the computer, electronic and optical products sector will be treated as
one aggregated sector. Note that the demographics – ageing of young and old – and its effects
on labour supply have not been taken into consideration as distinguishing drivers between
scenarios. Rather they are assumed to play similar roles in each of the scenarios.

One set of endogenous factors has been excluded from the scenarios; this concerns any of the
strategies and/or policies taken to improve and further fine tune the educational and training
system, as these are included in the next research step 8 ‘what can be the main strategic
choices to meet these skill needs?’ (see Chapter 13). In step 8, solutions are identified to meet
the skill needs identified for each of the scenarios. Solutions include, amongst others, options
to retrain workers, to offshore skills and to adapt the educational system. It should be
mentioned that for the construction of the scenarios only those drivers with the highest
ranking - a score between 8 to 10 (scale 0-10) as granted by a team of experts have been
taken into consideration (see Chapter 9).

10.2 The drivers – building blocks for scenarios

The exogenous drivers that make up the four scenarios in Figure 10.1 reflect a world
economy that is expanding further, with Europe finding its way but with the new emerging
economies in Asia gradually but steadily growing in importance. In all scenarios, global
competition and globalisation will increase, but at the right-hand side Europe is very much in
control of orchestrating global innovation, sourcing and production networks. At the left-
hand side Europe has to share this position with other leaders. A main difference between the
left-hand and right-hand sides of the scenarios is defined through the development of income
growth and in relation to that the extent of the need for customised and personalised products
and the speed and reach of the adoption of ICT tools. The endogenous drivers on top of
Figure 10.1 exemplify a situation of an open, creative and flexible society with effective and


                                                                                              55
streamlined European innovation policies as well as open and multilateral trade regulations.
The bottom of the figure reflects a closed and conservative Europe with very fragmented
innovation policies and selective and bilateral trade regulations. A further description of each
of the individual drivers is given below, followed in section 10.3 by concise descriptions of
the four scenarios.

Overview and description of exogenous drivers
  o Outsourcing and offshoring, especially of user industries: Outsourcing and offshoring
      activities continue across sectors (e.g. automotive; ICTs) and time. Decreasing levels
      of offshoring may occur due to protectionist tendencies in response to globalisation as
      well as slower growth in world trade and third countries’ economic growth; increasing
      levels of outsourcing may occur due to a positive conclusion of multilateral trade
      negotiations in WTO-context, as well as stronger growth of world trade and third
      countries’ economic growth.
  o Globalisation and global competition: globalisation will continue to play a major role
      in this sector, along fierce international competition. In all scenarios globalisation and
      global competition is supposed to be an important driver.
   o Income per capita: Slower growth of income per capita due to less domestic growth
      and less global trade vs. faster growth of income per capita driven by an expanding
      global economy.
   o Technology: Advances in ICT impact on organisational structure, with the Internet
      and automation changing production in ICT manufacturing, and in manufacturing in
      general. Technology also impacts the way consumers are able to buy their products
      (see further demand). Differences will apply to ICT, automation and broadband roll-
      out and uptake: strong on the right hand, moderate on the left hand.
   o Demand and market segmentation: The demand for ICT products is very
      individualised for specific social groups with a strong demand for customisation and
      personalisation of products (right hand). At the other extreme, a mixture of traditional
      and modern lifestyles and households is observed together with a stronger demand for
      more standardised products (mass consumption), also because of income
      developments.

Overview and description of endogenous drivers
   o Trade and market regulation: very important in all scenarios, with an emphasis on
      openness and trade, multilateralism and next WTO-Round successes on the upper end
      of the scheme, and an emphasis on selective border protection (operated via safety
      clauses) and trade, yet facilitated by bilateral trade agreements rather than by
      multilateralism at the bottom end of the scheme.
   o Societal and cultural environment: at the top end the successes of the Lisbon strategy
      have brought about an open, creative society, which highly welcomes new
      technologies and opportunities. Appropriate regulation on issues of privacy and
      security ensure that trust in new technologies has been established. At the bottom end
      we observe a rather closed conservative society, without a lot of faith and trust in
      existing proven technologies, and with followers rather than early adopters and
      experimentalists.
   o Innovation policy: on the one hand we observe a flexible and focused European
      innovation policy, with science and industry being even better supported, facilitated
      and stimulated to work on leading-edge high tech solutions (top of scheme); at the
      other hand      we observe assume nationally-dominated fragmented (national)
      innovation policies without sufficient critical mass or focus (bottom of scheme).


                                                                                             56
10.3 The scenarios – detailed discussion

Based on the combination of endogenous and exogenous drivers we discriminate four sector
scenarios for the computer, electronic and optical products sector:
   • Scenario I: High-end Customer Hi-Wi-Fi
   • Scenario II: Hi-Wi-Fi for Everyone
   • Scenario III: Footloose and offshored
   • Scenario IV: Fading away.

Scenario I: High-end Customer Hi-Wi-Fi
In the scenario High-end Customer Hi-Wi-Fi, the European computer, electronic and optical
equipment industry creates sustainable high-end niches and is able to market its products both
domestically and abroad. In High-end Customer Hi-Wi-Fi strong export goes hand in hand
with continuing and strong international competition. European society is characterised by an
open attitude, willing to experiment and looking for creative solutions for everyday problems
(in the realm of work, leisure, quality of life). Together with a focussed European innovation
policy and complementary streamlined national innovation policies, this creates a viable
environment for regaining ground in both innovation leadership and market leadership for
EU-based firms in the sector. The sector will first and foremost serve high-end niche markets.
Due to life-style changes in society, consumers have a high demand for individualised
products, which is met by the application of highly diversified mass customisation and mass
individualisation. The specific needs of an ageing population will be addressed. Production of
medical equipment is gaining importance and there is strong progress in recycling of
materials, as well as developments in designing energy-efficient ICT equipment. European
firms are the leading firms (e.g. Philips, Siemens) in organising and orchestrating the even
more elaborate flexible international value networks. Most of the standardised production is
being outsourced and offshored, but European companies increasingly move back to Europe
their production facilities for high-end and niche segments of the European market. European
companies are convinced that it is best to develop and produce high-end and niche products
closer to the customers, that it enables better quality assurance and that it saves in logistics.
The new Member States will gradually develop into a sizeable assembly platform for these
high-end and niche products at the European market; it also gradually develops capacities in
R&D and in the design of products.

Scenario II: Hi-Wi-Fi for Everyone
In the scenario Hi-Wi-Fi for Everyone it is predominantly the social and cultural climate that
is conducive to change, with apt innovation policies stimulating further high tech innovations.
However, European income growth is low, and with lagging growth (even falling behind) in
the domestic market; consumer demand is also less individualized. Therefore, the most
important opportunities for firms in the sector lie outside Europe: to export high tech niche
products to the rest of the world. Product developments for specific groups, e.g. the elderly
(health-related), halt in Europe because of fragmented markets and the dominance of national
regulation; the single European market for services does not materialise. Europe specialises
only in certain niche markets, like medical equipment for hospitals (but less for individual
customers). Outsourcing and offshoring will continue and assembling presently located in the
new Member States will move out of Europe as well. Only very specialised and tailor-made
assembling of niche products for the export market will remain in Europe, probably in the
new Member States. Although Europe will face multiple economic blocks to compete with,
European firms will be able to compete fiercely on the basis of differentiation. Europe will
belong to the leading coordinators of international value and production networks.


                                                                                              57
Scenario III: Footloose and Offshored
In the Footloose and Offshored scenario, income growth is strong and consumers are
demanding more and more customised and personalised products and services. European
society is, however, relatively inward looking. Innovation policies are fragmented across
countries and do not generate sufficient mass to matter for innovation for this sector.
European firms are outcompeted in meeting the demand for individualized products and
services, including age-specific products. Highly customised high tech products and services
are increasingly imported from outside Europe, especially from Asia. Indeed, consumers pick
and choose from whatever is available, world-wide, and facilitated by the Internet.
Assembling will move almost completely outside Europe, also the more specialised and
tailor-made assembling. Several European firms will remain leading global value networks,
but with hardly any production locations in Europe anymore. Transnational firms like Philips
and Siemens - in that sense start to look more and more like clothing retailer Benetton: their
headquarters, PR and marketing functions still being in Europe but most of the other vital
company functions performed elsewhere and even outside the company. R&D – like
production in the 1990s and the 2000s – has gradually moved out off Europe. For Asia or any
other part of the world for that matter, Europe is no longer an important developing ground
and source for high-tech products, services, knowledge and expertise.

Scenario IV: Fading away
In the Fading Away scenario income growth is low, and although Europe is still a sizeable
market, the demand for renewing innovative products and services lags behind compared to
other parts of the world. User industries tend to go where the(ir) markets are; Europe is losing
ground in that respect. There is little demand for individualised products, including age-
specific products and services. In general, European society is inward-looking with
protectionist tendencies lurking. Innovation policy is mainly national policy and is
fragmented. European firms show a striking lack of initiative and capability to develop new
high tech products for the export market. European firms that still have some production in
Europe will offshore and outsource the remainder outside Europe. Only the development and
production of very specialised niche products will remain. Europe faces the risk of a brain
drain of people working in the sector to other sectors, as well as the industry outside Europe.

Participants at the final workshop put the High-end Customer Hi-Wi-Fi as the most desirable
scenario, but also the one most difficult to achieve. This scenario was regarded together with
Hi-Wi-Fi for Everyone a plausible scenario for the medical, optical and precision devices
sub-sectors. Most plausible overall, however, in the view of the workshop participants was
Hi-Wi-Fi for Everyone. For the electronic components, computers and consumer electronics
sub-sectors Footloose and Offshored also qualified as a very plausible scenario.




11      Job functions – towards a workable structure

In order to determine the quantitative and qualitative implications of the scenarios for jobs
and skills, a workable job classification is needed. The occupational classification of the
available sector data derived from the Eurostat Labour Force Survey (LFS) is used as a
starting point (see Box 3). The advantage of using this classification is that developments in
the past as observed in the LFS can help to foresee likely trends for the future. For example, it


                                                                                              58
might be expected that future developments in new Member States in some cases will follow
similar paths as old Member States in the recent past. Moreover, where strong growth of
certain job functions appeared in most recent years, one might have a reason to cautiously
weigh and re-assess any further increases in future years, as the situation (markets and other
factors) might have stabilised in the mean time. The share of job functions in total sector
employment is not unimportant either; sizeable shares call for adequate attention. This does
not imply that job functions with only very minor shares of the total should be ignored
altogether. It might well be that occupations that have small shares now will face strong
growth in the oncoming years, or are strategic and vital for growth of the sector as a whole,
even if small in size.

However, the LFS job classification cannot be taken over one to one. First, the given LFS
definitions of the job function groups are highly aggregated and cover therefore highly
heterogeneous but not always comparable job functions. Reporting on this most aggregate
level therefore would not be very illuminating. Second, some functions which may be
strategic for the sector when looking at the future can be ‘hidden’ in a broader statistical
category. This also includes ‘new’ emergent job functions. For both reasons some of the
aggregated categories have been split up into separate job function categories, which have
been given a more in-depth treatment. The opposite case, where certain job functions may be
closely related, but do not fall within the same statistical LFS class, may also apply. Here it
would be logical to combine them.



Box 3. The European Labour Force Survey
The European Union Labour Force Survey (LFS) is conducted in the 27 Member States of the
European Union and two countries of the European Free Trade Association (EFTA) in accordance
with Council Regulation (EEC) No. 577/98 of 9 March 1998. The data collection covers the years
1983 to 2006 and covers all industries and occupations. The national statistical institutes are
responsible for selecting the sample, preparing the questionnaires, and conducting the direct
interviews among households. The Labour Force Surveys are centrally processed by Eurostat, using
the same concepts and definition, based on the International Labour Organisations guidelines and
common classifications: (NACE (rev 1), ISCO-88 (COM), ISCED, NUTS).
Although the LFS can be used for comparative purposes, the relative small sample size (in 2002 the
sample size was about 1.5 million of individuals, which represents 0.3% of the EU population) means
that error margins can be high, especially when the industry itself is rather small.
Source: Eurostat (2008)

Third, in the trend analysis it was already observed that whereas in some countries
employment shares of a particular (production) job function were extremely large, similar
shares in other countries appeared extremely low, often with another closely related job
function being much higher. A very likely explanation for this phenomenon is that in some
countries workers are reported as job function x while in others they are reported as job
function y, where basically similar tasks on the job are performed. By taking aggregates for
these function types, this sort of reporting bias can be avoided. Fourth, the job functions that
appear from statistical data analysis might not always be similar to what a person in or
familiar with that sector would rank as the job functions that matter “in reality”, i.e. from a
work floor perspective. On the basis of discussions with experts and national sector skills
studies, an attempt was made to provide a job classification that is both workable and
recognisable by the sector in practice. This classification is shown as Table 11.1 below.


                                                                                                59
In order to establish a meaningful and appropriate classification, the existing LFS
occupational classification for the computer, electronic and opticl products sector was
adapted by either aggregating and/or selecting further differentiating some professions out of
the original LFS statistical classification. This exercise was based on four criteria:

   o employment shares (aggregating);
   o closely related job functions (aggregating);
   o strategic role in sector (disaggregating by further selecting among the occupational
     groups identified in the statistical classification);
   o emergent job functions not yet covered and/or brought fully to light by current
     statistics.
In order to establish a meaningful and appropriate classification, the existing LFS
occupational classification for the computer, electronic and optical products sector was
adapted by either aggregating and/or selecting further differentiating some professions out of
the original LFS statistical classification. This exercise was based on four criteria:

   •   employment shares (aggregating);
   •   closely related job functions (aggregating);
   •   strategic role in sector (disaggregating by further selecting among the occupational
       groups identified in the statistical classification);
   •   emergent job functions not yet covered and/or brought fully to light by current
       statistics.




                                                                                              60
Table 11.1 Job classifications
Classification in Labour Force Survey (LFS)        Specific jobs of high            Job function categories as
                                                   relevance to sector falling      used in the next tables*
                                                   in LFS classification
Managers                                           Corporate and specialist         Managers
                                                   managers covering all firm
                                                   functions. Especially
                                                   managers that are capable of
                                                   organising value chains,
                                                   open innovation networks
                                                   and global sourcing and
                                                   production networks.
Computing professionals                            Computer systems                 IT system developers
                                                   designers, analysts and
                                                   programmers. Especially          IT system appliers and
                                                   designers and system             supporters
                                                   integrators
Engineers and related professionals                Electrical engineers and         Production engineers
                                                   Electronics engineers.
                                                   Especially designers and         R&D engineers
                                                   system integrators.
Business professionals                             Accountants, Personnel and       Accounting & Finance
                                                   careers professionals,
Other professionals                                Finance and sales                Sales & Marketing
                                                   professionals. Especially
                                                   professionals that can
                                                   translate market                 Supply chain managers
                                                   requirements into product
                                                   specifications
Office clerks and secretaries                      Office clerks and                Support staff
Service workers                                    secretaries, customer
                                                   services clerks, receptionists
                                                   and information clerks,
                                                   transport conductors
Metal, machinery & related trades workers          Machinery mechanics and          Metal & machinery workers
                                                   fitters, metal moulders,
                                                   welders, tool makers
Electrical and electronic equipment mechanics      Electrical and electronics       Electrical and electronic
and fitters                                        mechanics, fitters and           equipment mechanics and
                                                   services                         fitters
Precision, handicraft, craft printing an related   Precision workers in metal       Precision workers and
trades workers                                     and related materials,           repairers
                                                   precision-instrument makers
                                                   and repairers
Other craft and related trades workers             Other crafts
Assemblers                                         Electrical and electronic        Assemblers
                                                   equipment assemblers
Other plant and machine operators                  Other machine operators          Labourers
Labourers                                          Manufacturing labourers




                                                                                                                61
Table 11.1 shows the detailed job functions for the computer, electronic and optical products
sector, based on the original LFS classification and the classification (third column) used in
the remainder of this study. The following functions have been distinguished:

   •   Managers: top management and company owners/ entrepreneurs, but also including
       different specialist managers, such as HRM, finance, production, sales, and R&D
       management. Especially managers that are capable of organising value chains and
       innovation, sourcing and production networks are highly relevant for the sector.
   •   IT system developers: ICT professionals that develop and design systems and
       programmes such as system designers and programmers. Especially designers and IT
       systems integrators are important for the sector. In the optical products sector the
       focus will be on generating and processing images, which requires highly educated
       computing professionals.
   •   IT system appliers and supporters: ICT professionals that apply embedded software in
       the company as well as those supporting IT systems.
   •   Production engineers: electrical and electronics engineers, which apply and support
       the systems used in production.
   •   R&D engineers: electrical and electronics engineers that develop and design new
       products and processes and especially those that integrate systems, the ‘architects’.
   •   Accounting & Finance: accountants and bookkeepers.
   •   Sales and Marketing: sales and marketing staff, capable of translating market
       requirements into product specifications, but also customer relation management.
   •   Supply chain managers (SCM): a relatively new emergent category of high-educated
       workers who enable and facilitate complex regional and global SCM processes,
       including contracting.
   •   Support staff: on the one hand office clerks / secretaries & support staff covering
       administrative functions, including order management and stock keeping, and on the
       other hand legal professionals and HRM staff. Customer relation management and
       customer service activities are important especially in the consumer electronics sector.
   •   Metal and Machinery workers: metal moulders, welders, sheet-metal workers,
       blacksmiths, tool-makers, increasingly relevant for the optical products sector.
   •   Electrical and electronic equipment mechanics and fitters: electrical and electronics
       mechanics, fitters and services.
   •   Precision workers and repairers: precision workers in metal and related materials,
       precision-instrument makers and repairers, photographic workers. A distinction can
       be made between precision makers and repairers. Precision makers are usually highly
       qualified technicians, for example working in clean rooms, while precision repairers
       are especially active in after sales and maintenance, which often requires less high
       qualifications.
   •   Assemblers: electrical and electronic equipment assemblers, especially end-
       assemblers.
   •   Labourers and operators: manufacturing labourers, quality control workers.

An overall trend is that jobs become more standardised and more complex at the same time.
Tacit knowledge becomes more explicit and codified and all tasks and responsibilities
belonging to a certain job function are described. In addition, job functions are increasingly
build up in a modular way, combining various tasks, responsibilities, skills requirements and
competences needed: a ‘pick and mix’ system of job descriptions. However, this does not
necessarily result in simpler jobs. On the contrary, the high level of quality requirements,


                                                                                            62
complicated products and production processes, increasing adoption of ICT and Internet, and
increasing time pressures – just to name a few – make jobs more complex and demanding.11




12        Implications of scenarios by job function - volume effects

Different futures will have different implications for jobs, both in quantitative and in
qualitative terms. In this chapter the implications of the four scenarios in terms of volume
effects for each of the identified job functions are assessed. Trends and developments of the
recent past provide an important starting point in forming an idea about these future
developments. This quantitative trend information has been combined with expert opinions of
a core expert team and supplemented with insights from invited sector experts in a dedicated
workshop to assess which volume effects would be likely to occur for which job functions. It
should be emphasized that the referred expected changes are qualitative in nature, reflecting
the outcome of expert judgements and expert discussion as well as desk research taking into
account the results of other studies. The results of the following chapter should therefore be
used as a supplement and an independent expert assessment in addition to other more formal
analyses, e.g. based on mathematical and/or econometric modelling and simulation.

Main volume trends based on the period 2000-2006 are as follows:

     •   Managers: managers represent 9% of the sector’s workforce in the EU (equivalent to
         185 thousand workers12), with a somewhat larger share (10%) in the EU-15, and a far
         lesser share in the new Member States (5%). Especially the number of high educated
         managers is increasing in the EU-15; the surge in managers in the new Member States
         is mainly based on the middle educated segment. It is expected that high educated
         managers will become increasingly important all over Europe. Especially managers
         capable of organising global value chains and innovation, production and sourcing
         networks will become important.
     •   Computer professionals: computer professionals represent 8% (158 thousand workers
         in 2006) of the sector’s workforce in the EU. Over the period 2000-2006 their share
         increased with 2%. Especially high educated computer professionals have expanded
         their representation, but at the cost of middle educated IT professionals; this last group
         lost 6% in the EU-15 and 7% in the new Member States. On the other hand, the lower
         educated computer professionals increased with 3% in the new Member States. For the
         future it is expected that IT professionals will become more relevant, especially in
         relation to design, system integration and system architecture functions.
     •   Engineers: engineers represent by far the largest occupation function (19%, 396
         thousand workers in 2006) and their share has increased with 2% in the period 2000-
         2006. This increase was somewhat stronger in the new Member States than in the EU-
         15. The share of low-educated engineers dropped with 2%, while the middle educated


11
   Comment by Prof. U. Huws at Final Workshop 20-21 November 2008; See also European Foundation for the
    Improvement of Living and Working Conditions (2007)
12
   Note that these figures (number of managers and all other job functions mentioned herein) are estimates,
    based on the latest Labour Force Survey (LFS) results.


                                                                                                        63
    engineers increased with 2 %. It is expected that especially the design functions, which
    require high education levels, will become highly relevant in the future.
•   Business and other professionals: business and other professionals represent 303
    thousand workers in 2006, which is a share of 14% of the sector’s workforce in the EU.
    The number of business and other professionals remains relatively stable in the period
    2000-2006, but there is a clear shift from lower educated professionals to middle
    educated professionals. Especially in the new Member States the middle educated
    professionals increased substantially. Nevertheless, the share of high educated business
    and other professionals decreased slightly. For the consumer electronics marketing and
    sales professionals will become increasingly important. Especially the translation from
    market requirements into product specifications as well as customer relation
    management will increasingly become important.
•   Support staff: secretaries and office clerks represent about 10% of the sector’s
    workforce (200 thousand employees), but is a declining job function in relative shares.
    Especially the lower and middle educated office clerks are diminishing and are
    increasingly replaced with high educated staff, mainly in the new Member States. Also
    the service workers are increasingly higher educated. The diminishing amount of
    support staff, in particular the lower educated job functions, is likely to be caused by
    productivity gains from ICT that allow organising work in a more efficient manner.
    This trend is expected to continue.
•   Metal and machinery workers: metal and machinery workers represent 5% of the
    sector’s workforce (94 thousand workers) in 2006 and their amount remained stable in
    the period 2000-2006. Also in this job function group, lower educated functions have
    been replaced with middle-educated jobs. It is expected that metal and machinery
    workers and in particular instrument makers will become more relevant because of the
    developments in the optical products sector.
•   Electrical and electronic equipment mechanics and fitters: over-all Europe electrical
    and electronic equipment mechanics and fitters represent 7% of the sector’s workforce
    (153 thousand workers in 2006). This share was somewhat higher in the new Member
    States (10%). In the period 2000-2006, the share of this job function group decreased
    slightly and again, lower educated jobs were replaced by middle educated jobs.
•   Precision workers and repairers: in 2006 the precision, handicraft or craft related
    workers accounted for a share of 8% of the total worforce (163 thousand employees).
    This group of job functions remained stable in the period 2000-2006 and this is
    expected to continue in the future. Especially in the electronic components and optical
    products sector craft-related work will remain relevant.
•   Assemblers: Assemblers is the largest group of employees in the new Member States
    (23%), but substantially less relevant in the EU-15 (8%). In total, 222 thousand
    employees are active in this function. The number of assemblers is diminishing in the
    EU-15, but still increasing in the new Member States. In addition, the job function
    assemblers is increasingly occupied by middle educated workers, at the cost of the
    lower educated workers. It is expected that end assembling will remain highly relevant
    in Europe, while sub-assembling will increasingly be done in Asian countries.
•   Labourers and operators: labourers and operators of plants and machines represent 186
    thousand workers in 2006 (9%). In the period 2000-2006 the amount of labourers
    decreased, especially in the new Member States, while the number of machine
    operators increased slightly. Like for other job functions, the share of lower educated
    jobs is diminishing and replaced with middle educated jobs.




                                                                                         64
The results in Tables 12.1 and 12.2 represent the relative expected changes in the volume of
workers by job function in the computer, electronic and optical products sector by the
scenario end year 2020. The tables show the different selected job functions and the changes
expected for each of the scenarios. A distinction has been made between the electronic
components and the computers, communication equipment and consumer electronics on the
one hand and the optical and medical products on the other hand. In the last row an
assessment of the overall expected job development is given. Table 12.1 represents the High-
end Customer Hi-Wi-Fi and the Hi-Wi-Fi for Everyone scenarios. Table 12.2 highlights the
Footloose and Offshored and Fading Away scenarios.


12.1 Volume effects scenarios High-end Customer Hi-Wi-Fi and Hi-Wi-Fi for
     Everyone

The High-end Customer Hi-Wi-Fi scenario gives the most positive results in terms of overall
employment volume in 2020 (see Table 12.1). In this scenario, Europe will be leading and
orchestrating the global innovation, production and sourcing networks and this will result in
more managers, IT professionals and business professionals, especially those positions that
require system integration capabilities. A sizeable assembly platform will gradually develop
in Central and Eastern Europe with tailored production and assembly platforms, focusing on
highly specialised niche markets. This will also increase the employment in assembling,
especially in specialty assembling and end-assembling. The main difference between the
electronic components and the computers, communication equipment and consumer
electronics on the one hand and the optical and medical products on the other hand will be the
fact that Europe will further extend its comparative advantage in the highly specialised and
tailored medical and optical equipment segment, producing diagnostic equipment (X-ray,
electro- and a range of other, mostly medical, equipment); radar, industrial process control
equipment, but also instruments and appliances for aeronautical or space navigation. This
development will result in an increase in specialised metal and machinery workers as well as
precision workers and repairers.

The Hi-Wi-Fi for Everyone scenario will result in a relatively stable employment
development. The opportunities will lie outside Europe and in very high-tech niche markets,
for example in medical and precision equipment. Europe will remain an important
orchestrator of global networks, hence requiring managers and business professionals capable
of organising these networks, but it will not expand its leadership. Only very specialised and
tailor-made assembling of niche products for the export market will remain in Europe, but the
rest of the assembling will move outside Europe. Europe will continue developing specialised
high-tech products, but it will be less extensive than in the first scenario. This implies that
increases in employment are mainly to be expected in the optical and medical products
sector.




                                                                                            65
Table 12.1 Scenario implications: relative volume changes by job function, 2009-2020
                                  High-end Customer Hi-Wi-Fi        Hi-Wi-Fi For Everyone
                                  Electronic       Medical,      Electronic        Medical,
                                 components,       optical &    components,        optical &
                                  computers,     measurement     computers,      measurement
                                communication       devices    communication        devices
                                equipment and                  equipment and
                                   consumer                       consumer
                                  electronics                    electronics
Managers                               +               +              0               0/+
IT system developers                   +               +             0/+               +
IT system appliers and                 0               0              0                0
supporters
Production engineers                   0             +               0               0
R&D engineers                          +             +              0/+              +
Accounting & Finance                  0/+           0/+              0               0
Sales & marketing                      +             +               0               0
Supply chain managers                  +             +              0/+             0/+
Support staff                          -             -               -               -
Metal and machinery workers            0            0/+              -              0/+
Electric and electronic                -             -               -               -
equipment mechanics and
fitters
Precision workers and                  0             +               0               +
repairers
Assemblers                            0/+            +               -               0
Labourers and operators                -             -               -               -
Overall job change                     +             +               0              0/+
Notes: - =decrease, +=increase, 0=maintain.



12.2 Volume effects scenarios Footloose and Offshored, and Fading Away

The net overall employment impact of the Footloose and Offshored scenario in 2020 imploy
a stable development for the management and business professionals positions, but a real
decline for the design and production functions. All production and also R&D has moved
outside Europe and high-tech products and services are developed in other parts of the world,
with jobs having moved with them. European firms are still important actors in organising the
global value networks, but the only function they will keep in Europe are functions close to
the market: marketing, PR and main headquarters functions. The impact of the Footloose and
Offshored scenario will not differ between the electronic components and the computers,
communication equipment and consumer electronics on the one hand and the optical and
medical products on the other hand. The European consumer demand for these products is
booming, but the products will be produced in and come from other parts of the world.

The Fading Away scenario has most negative employment implications. Due to negative
market developments in Europe in combination with a conservative spirit, European firms
will loose ground. European firms will move their activities completely outside Europe,
although there will be some firms that will continue their function as organising and leading
global value networks.




                                                                                               66
Table 12.2 Scenario implications: relative volume changes by job function, 2009-2020
                                     Footloose and Offshored               Fading Away
                                   Electronic        Medical,      Electronic       Medical,
                                  components,       optical &     components,       optical &
                                   computers,      measurement     computers,      measurement
                                 communication       devices     communication       devices
                                 equipment and                   equipment and
                                    consumer                        consumer
                                   electronics                     electronics
Managers                               0/+             0/+             0/-             0/-
ITsystem developers                     0               0               -               -
IT system appliers and                  0               0               -               -
supporters
Production engineers                     -             -               -               -
R&D engineers                            -             -               -               -
Accounting & Finance                     0             0               -               -
Sales & marketing                       0/+           0/+              -               -
Supply chain managers                   0/+           0/+             0/-             0/-
Support staff                            -             -               -               -
Metal and machinery workers              -             -               -               -
Electric and electronic                  -             -               -               -
equipment mechanics and
fitters
Precision workers and repairers          -             -               -               -
Assemblers                               -             -               -               -
Labourers and operators                  -             -               -               -
Overall job change                      0/-           0/-              -               -
Notes: - =decrease, +=increase, 0=maintain.




13       Implications of scenarios-main emergent competences

13.1 Introduction

Determining emergent competences is at the very heart of this study. In order to identify the
main emergent competences by occupational function, the Rodrigues (2007) methodology
refers to three main competences: theoretical, technical and social competences. This
distinction builds on the distinction between knowledge, skills and competences in the
European Qualifications Framework (EQF) and the European Credit system for Vocational
Education and Training (ECVET) (see Box 4 below). The term human capital broadly
defined by the OECD as ‘the knowledge, skills, competencies and attributes embodied in
individuals that facilitate the creation of personal, social and economic well-being’ (OECD,
2001:18) captures all three. The use of the term ‘capital’ leads one to think in terms of
investments in education and training which are often necessary in order to acquire skills and
knowledge. However, skills and knowledge can also be acquired through work experience,
informal on-the-job learning and a variety of other means.




                                                                                                 67
Box 4. Definition of competences, skills and knowledge in EQF and ECVET
Several definitions of knowledge, competences and skills are nationally as well as internationally
under discussion. Moreover, Member States of the European Union still have different approaches in
defining these terms. The European Union has set up a joint process to co-ordinate the different
existing terminologies and to find a common basis. Aims of this process are for example to strengthen
the mobility of the labour force within the European Union and to facilitate sectoral developments. In
the following reference is made to the definition used by the European Qualification Framework
(EQF) and the European Credit System on Vocational Education and Training (ECVET).

The EQF links national qualification systems and tries to make vocational training and lifelong
learning more transparent and understandable. Therefore a common terminology was developed. The
following descriptors are taken from the EQF (European Commission, 2008b; see also European
Commission, 2008c):
-   Knowledge refers to the outcome of the accumulation of information through learning.
    Knowledge is the body of facts, principles, theories and practices that is related to a field of work
    or study. In the context of the European Qualifications Framework, knowledge is described as
    theoretical and/or factual;
-   Skills refers to the ability to apply knowledge and use know-how to complete tasks and solve
    problems. In the context of the European Qualifications Framework, skills are described as
    cognitive (involving the use of logical, intuitive and creative thinking) or practical (involving
    manual dexterity and the use of methods, materials, tools and instruments);
-   Competence refers to the proven ability to use knowledge, skills and personal, social and/ or
    methodological abilities, in work or study situations and in professional and personal
    development. In the context of the European Qualifications Framework, competence is described
    in terms of responsibility and autonomy;
-   Qualification refers to a formal outcome of an assessment and validation process which is
    obtained hen a competent body determines that an individual has achieved learning outcomes to
    given standards;
-   Learning outcomes refer to statements of what a learner knows, understands and is able to do on
    completion of a learning process, which are defined in terms of knowledge, skills and
    competence.


Box 5. Skills needs, skills shortages and skills gaps defined
-   Emergent skills needs are defined here as the change in skills that is needed to adequately fulfil a
    certain job function in the future. Addressing emergent skills is needed in order to avoid skills
    shortages and/or skills gaps in the future.

-   Skills shortages exist where there is a genuine lack of adequately skilled individuals available in
    the accessible labour market. A skill shortage arises when an employer has a vacancy that is hard-
    to-fill because applicants lack the necessary skills, qualifications or experience.

-   Skills gaps arise where an employee does not fully meet the skills requirements for a specific job
    function but is nevertheless hired. This skills gap needs to be closed through training. Skills gaps
    can arise where new entrants to the labour market are hired and although apparently trained and
    qualified for occupations still lack some of the skills required.


In the actual identification of future competences, the EQF/ECVET definitions are used as
indicative. It is noted that the difference between competences and skills is not always clear-



                                                                                                      68
cut, for instance where ‘soft skills’ come into play. A similar comment holds for what
determines job or occupational qualifications.13 Partly because of these identification issues,
adequate measurement of competences, knowledge and skills is notoriously difficult. In some
of the literature, the problem of skills measurement is sometimes avoided by using indicators
(proxies) focusing on qualifications (high-level, intermediate-level, low-level) as well as
occupations. For the purpose of identifying future skill needs such approach will not deliver
useful results. Instead it is the knowledge and skills behind that need to be identified.

Rather than producing a full and exhaustive list of all competences for each job function, the
key focus in this chapter is on identifying and describing key and critical competences for the
future. The description will be focused but also general enough to be meaningful across
countries. A slight extension of the original Rodrigues methodology is that together with the
identification of critical skills and knowledge needs, a differentiation by scenario is made.
Skills and knowledge needs are operationalised as expected key changes in specific skills and
knowledge categories by occupation.

Throughout this report the term competences is defined as the “proven ability to use
knowledge, skills and personal, social and/or methodological abilities, in work or study
situations and in professional and personal development.” (see Box 4 for definitions). In the
practical elaboration of competence needs hereafter the focus is predominantly on knowledge
and skills needs, with a further distinction to what is usually described as ‘soft skills’ such as
team working skills, and planning and organising. Note that the ‘personal, social and/or
methodological abilities’ included in the definition of competences (see Box 4) come very
close to what is generally understood as ‘soft skills’.

A number of different skills categories have been taken into account, including social skills,
problem solving skills, (self) management skills, skills related to entrepreneurship, as well as
knowledge requirements (sometimes labelled as ‘hard skills’). Table 13.1 provides an
overview of the different skills and knowledge categories taken into consideration. Literacy
and numeracy skills are not specifically mentioned in the tables. In practice these skills
cannot be taken for granted. However, they are a prerequisite rather than an emerging skill to
participate in the workforce especially in science-based sectors. For each job function key
future skills and knowledge needs were identified. This was done in a workshop with a
number of invited sector experts, and validated in two subsequent workshops, including the
step 10 final workshop; the results therefore remain based on joint expert opinion. The
analysis in Part I and the data tables formed a ‘levelling’ starting point for each of the
discussants.




13
     ‘Qualification’ denotes the requirements for an individual to enter or progress within an occupation. It also
     denotes an official record (certificate, diploma) of achievement which recognises successful completion of
     education or training, or satisfactory performance in a test or examination. The concept of qualification varies
     from one country to another. It may express the ability – formally defined in work contracts or collective
     agreements – to perform a certain job or meet the requirements of the workplace. A qualification may give
     rise to a number of rights and prerogatives which determine the individual’s position within the hierarchy of
     his/her occupational context. (Tessaring, 2004: 235).


                                                                                                                 69
Table 13.1 Overview of skills and knowledge clustered by category
Knowledge (‘hard skills’)

 •    Legislative / regulatory knowledge (environmental / safety / labour / contracting); Language*; e-skills;
      Marketing skills; Technical knowledge; Product knowledge; Product development




Social Skills

 •    Team working skills; Social perceptiveness (listening / understanding); Communication; Networking;
      Language*; Intercultural

Problem-solving Skills

 •    Analytical skills; Interdisciplinary; Initiative, Multi-skilling; Creativity

Self management

 •    Planning; Stress and time management; Flexibility; Multi-tasking

Management skills

 •    Strategic & visionary; Coaching and team building; Change management; Project management; Process
      optimizing; Quality management; people skills crucial for collegial management style

Entrepreneurial skills

 •    Supplier and customer relationship / understanding; Business understanding; Trend setting / trend
      spotting


Key ‘new’ competences were thus identified for various job functions taking High-end
Customer Hi-Wi-Fi and Hi-Wi-Fi for Everyone as the most extreme focal scenarios. There
will not be substantial different emerging competences between these scenarios as in both
scenarios European companies will have opportunities for growth and will probably develop
their business in the same direction. The main difference is in the market: the High-end
Customer Hi-Wi-Fi scenario provides opportunities all over the world, while in the Hi-Wi-Fi
for Everyone scenario provides mainly market opportunities outside Europe. The
implications of the two other scenarios are not discussed in detail. Both Footloose and
Offshored and Fading Away scenarios reflect ‘gloomier’ futures in which endogenous drivers
are less well tuned to the interests of the computers, electronic and optical products sector in
Europe, but with identical exogenous factors as scenarios High-end Customer Hi-Wi-Fi and
Hi-Wi-Fi for Everyone. In other words, the global context in the top and bottom scenarios
(see Figure 10.1) does not differ. What differs are the European factors.

The emergent future competences – defined as skills and knowledge needs - are identified
and clustered together with similar ones in a concise overview table per job function (see next
sections 13.2 to 13.11). Only substantive key changes in skills and knowledge needs are taken
into account, which means that only part of the cells in the table is ‘filled’. However, if a
certain skill or knowledge type is highlighted in one scenario, but is not addressed in another,



                                                                                                           70
this does not mean that it is irrelevant. Rather it means that relative demand for this skill in
the latter case will not increase within the time frame 2009-2020.

13.2 Managers

Both the Hi-Wi-Fi scenarios are characterised by fast change and dynamic markets. While
under the High-end Customer Hi-Wi-Fi scenario outsourcing and offshoring continues
strongly and Europe will expand its network leadership, in the Hi-Wi-Fi for Everyone
scenario Europe will stabilise this value network leadership. Diversification and segmentation
of markets is key in the High-end Customer Hi-Wi-Fi scenario, requiring strong management
skills to develop new markets and niches. In the Hi-Wi-Fi for Everyone scenario, the
European market will offer fewer opportunities for customisation and tailoring, but the
European firms will develop highly specialised and tailored products for the markets outside
Europe. In the following the main future skills and knowledge needs are described. A
summary of future skills and knowledge needs is provided in Table 13.2.

 •    Entrepreneurial skills of understanding consumer and supplier needs as well as spotting
      trends and market opportunities arising from structural changes are needed. Similarly
      the focus in these scenarios is on skills for developing new business in addition to
      managing and optimising of processes.
 •    Market segmentation implies organisational change management as old markets are
      restructured and new ones to be built up. This requires very well developed social skills
      to communicate change and inspire and manage people to grow and develop.
 •    Visionary and strategic skills are needed to identify market niches and successfully
      develop new business. With the focus on innovation and trend towards higher skilled
      employment management style becomes less hierarchical and more collegial.
 •    The changing organisational structures with increasing (out)sourcing, consumer and
      supplier relationships, project based team work leads to fluid organisational boundaries
      where management needs to be well networked and manage language and cultural
      differences.
 •    Due to a stronger differentiation of global supply chains and competition based on
      quality more than on price, total quality management skills will become more
      important.
 •    Globalisation and outsourcing requires more knowledge of global supply chain
      management, especially for SMES in order to strengthen their position in the sector.
 •    Global and virtual value networks bring new business models and types of
      collaboration, which will also require more knowledge of intellectual property.
 •    These skills and work requirements in a competitive global environment require
      managers to handle severe pressures for which time and stress management are crucial
      to function well over time.

Specific knowledge requirements:

 •    e-skills are crucial to operate in a modern business environment, also for managers;
      there is hence a need for continuously updating e-skills.




                                                                                             71
Table 13.2 Emerging skills and competences: Managers, 2009-2020
                                                                               High-end Customer Hi-Wi-Fi /
                                                                                  Hi-Wi-Fi For Everyone
 Knowledge / hard skills                Legislative & regulatory
                                        knowledge
                                        e-skills
                                        Technical knowledge
                                        Supply chain management
                                        knowledge
                                        Intellectual Property knowledge

 Social skills                          Team working skills
                                        Social perceptiveness
                                  Communication
                                  Networking
                                  Language
                                  Intercultural
 Problem solving skills           Analytical skills
                                  Interdisciplinary
                                  Initiative
                                  Multi-skilling
                                  Creativity
 Self management                  Planning
                                  Stress & time management
                                  Flexibility
                                  Multi-tasking
 Entrepreneurship                 Understanding supplier &
                                  customers
                                  Business development
                                  Marketing skills
                                  Trend setting / spotting
 Management skills                Strategic & visionary
                                  Coaching & team building
                                  Collegial management style
                                  Change management
                                  Project management
                                  Process optimizing
                                  Quality management
 Total emerging skilss and competences                                                      Count: 18
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                         72
13.3 Computer professionals

Two different lines of IT work are distinguished:

       •   IT system developers: Developing and designing IT systems, products and
           processes for the sector itself
       •   IT system appliers and supporters: applying IT systems and infrastructure in the
           organisations active in the sector and providing support to these systems and
           infrastructure
IT professionals developing IT systems and products for the computers, electrical and optical
products sector are already important for the sector, but the focus will be especially on skills
related to system design and integration. The optical products sector requires extensive
knowledge of optics, especially improved computing knowledge for generating and
processing images. This will be extremely important for the development of completely new
optical instruments for the medical sector.

IT support requires technical knowledge, also in relation to organisational change.
Restructuring frequently results in IT systems integration. Furthermore, professionals need to
keep up with technical knowledge of operating systems and programming languages.
Although technical skills are very important, computer professionals working in the IT
support need to develop their business and service-oriented skills in order to offer a full and
proactive support service with regular (internal) client contact. Important soft skills are then
customer interaction skills, the ability to work as a team, as well as understanding the
business they work in.




                                                                                             73
Table 13.3 Emerging skills and competences: Computing professionals, 2009-2020
                                                              High-end Customer             High-end Customer
                                                                  Hi-Wi-Fi /                    Hi-Wi-Fi /
                                                             Hi-Wi-Fi for Everyone         Hi-Wi-Fi for Everyone

                                                              IT system developers         IT system appliers and
                                                                                                 supporters
 Knowledge / hard              Programming
 skills                        languages
                               Modelling &
                               Simulation
                               B2B IT platforms
                               System integration
                               Imaging                          In optical industry           In optical industry

 Social skills                 Team working skills
                               Social perceptiveness
                            Communication
                            Networking
                            Language                                  In NMS
                            Intercultural                             In NMS
 Problem       solving Analytical skills
 skills                     Interdisciplinary
                            Initiative
                            Multi-skilling
                            Creativity
 Self management            Planning
                            Project management
                            Stress & time
                            management
                            Flexibility
                            Multi-tasking
 Entrepreneurship           Understanding supplier
                            & customers
                            Business development
                            Marketing skills
                            Trend setting / spotting
 Management skills Strategic & visionary
                            Coaching & team
                            building
                            Collegial management
                            style
                            Change management
                            Project management
                            Process optimizing
                            Quality management
 Total emerging skills and competences                               Count: 15                     Count: 13
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                         74
13.4 Engineers

Engineers represent by far the largest occupational function in the sector. With both scenarios
characterised by fast change and dynamic markets, the move towards sustainable market
niches and market segmentation are a key differentiator for the skills and knowledge
requirements of engineers. Two main types of engineers are distinguished here:

     •    Production engineers
     •    R&D engineers.


R&D engineers belong to the most important job functions in both scenarios, as R&D forms
the basis for growth in the sector in Europe and elsewhere. Production engineers are very
relevant in the highly complicated production of high-tech products (‘the Fab is the Lab’),
especially in the optical, medical and precision products sector. Both require not only
technical but also organisational and social skills. Social skills (esp. team working,
communication and networking), problem solving skills (analytical, interdisciplinary,
initiative, multiskilling, creativity) and self management (planning, flexibility, stress and time
management) skills are important for both production and R&D engineers.
 •       In both scenarios, R&D engineers will need to focus on the design of new products and
         services, should be able to have a broad perspective on the needs of the markets (trend
         spotting, visionary skills), and should be able to integrate different solutions into one
         product or service. Although in Hi-Wi-Fi for Everyone the European market will ask
         for mass consumption, the European firms will develop their high-tech products for the
         export market. While technical knowledge in general, and product development and
         system architecture knowledge are key for R&D engineers, also business understanding
         / customer understanding is crucial.
 •       Innovation is organised around interdisciplinary expert teams on a project basis and in a
         collaborative working mode, even incorporating external experts either from
         universities or other firms. This requires increased project management skills from
         especially R&D engineers.
 •       As surveyors of the production process, process optimising and quality management
         skills will be important for production engineers as well, especially in high-tech
         products markets, including the medical, optical and precision equipment sector.


 Training and educational needs:
 •       Interdisciplinary studies are needed to develop the skills and capabilities for designing
         products and services integrating several solutions addressing market needs
 •       At present, there are not so many students trained in optical sciences. This will imply a
         lack of trained people for the optical products sector in the near future. More students
         should be trained in the optical sciences.




                                                                                               75
Table 13.4 Emerging skills and competences: Engineers, 2009-2020
                                                             High-end Customer            High-end Customer
                                                                 Hi-Wi-Fi/                    Hi-Wi-Fi/
                                                            Hi-Wi-Fi for Everyone        Hi-Wi-Fi for Everyone

                                                            Production engineers             R&D engineers
 Knowledge / hard             Legislative / regulatory
 skills                       knowledge
                              e-skills
                              Technical knowledge
                              Product knowledge
                              Product development
                              System architecture
                              knowledge
 Social skills                Team working skills
                              Social perceptiveness
                           Communication
                           Networking
                           Language
                           Intercultural
 Problem       solving Analytical skills
 skills                    Interdisciplinary
                           Initiative
                           Multi-skilling
                           Creativity
 Self management           Planning
                           Stress & time
                           management
                           Flexibility
                           Multi-tasking
 Entrepreneurship          Understanding supplier
                           & customers
                           Business development
                           Marketing skills
                           Trend setting / spotting
 Management skills Strategic & visionary
                           Coaching & team
                           building
                           Collegial m anagement
                           style
                           Change management
                           Project management
                           Process optimizing
                           Quality management
 Total emerging skills and competences                             Count: 14                    Count: 20
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                         76
13.5 Supply Chain Managers

Supply chain management is a new function based on global reach of firms promising
strategic advantages by sourcing globally, improving customer service and getting products
to market faster. The function is a hybrid of previous job functions related to purchasing,
sales and logistics. The skills required by SCM professionals are not scenario dependent.

While the demand for this type of job function manifests itself in the increasing numbers of
university courses focused on supply chain management, the required competences can
partially be acquired through codified knowledge but also rely in large parts on practical
experience and learning on the job. Specific knowledge requirements relate to:

 •    University degrees in supply chain management / business management courses for
      people on the job
 •    Relevant IT skills of programmes related to supply chain management SCM / SRM /
      CRM etc.
 •    Trade regulation, taxes / tariffs
 •    Judicial / legal knowledge; contracts
 •    Financial knowledge: with volatile raw material prices increasingly financial
      instruments to hedge sourcing become relevant knowledge for professionals
Like most professional jobs a set of soft skills is required to function in a global environment.
Global sourcing requires language / intercultural skills as well as standard social skills.
Additionally, working with various partners around the globe also requires excellent project
management skills and self management (stress & time management).

A pressing e-skill demand in both scenarios for SCM professionals are e-business skills for
supply chain management to enhance effectiveness and efficiency in value chain
management.




                                                                                              77
Table 13.5 Emerging skills and competences: Supply Chain Managers, 2009-2020
                                                                                High-end Customer Hi-Wi-Fi/
                                                                                   Hi-Wi-Fi for Everyone
 Knowledge / hard skills                Legislative / regulatory
                                        knowledge
                                        e-skills
                                        Technical knowledge
                                        Product knowledge
                                        Product development
                                        Financial knowledge
 Social skills                          Team working skills
                                        Social perceptiveness
                                        Communication
                                        Networking
                                        Language
                                        Intercultural
 Problem solving skills                 Analytical skills
                                        Interdisciplinary
                                        Initiative
                                        Multi-skilling
                                        Creativity
 Self management                   Planning
                                   Stress & time management
                                   Flexibility
                                   Multi-tasking
 Entrepreneurship                  Understanding supplier &
                                   customers
                                   Business development
                                   Marketing skills
                                   Trend setting / spotting
 Management skills                 Strategic & visionary
                                   Coaching & team building
                                   Collegial management style
                                   Change management
                                   Project management
                                   Process optimizing
                                   Quality management
 Total emerging skills and competences                                                      Count: 10
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                         78
13.6 Accounting & Finance

Accounting and finance professionals are and will also in the future be required for the
controlling, bookkeeping and financial activities of firms. In that context they play an
important role to any organisation managing the complex flow of money. For that they
require high analytical skills as well as a developed set of soft skills required for any
professional job including relevant social skills.

Specific knowledge required relates to:

 •   Legislative / regulatory knowledge including accounting standards & regulation as well
     as financial regulations. In that context the computer, electronic and optical products
     sector is a global sector making it necessary for accounting and finance professionals to
     have an international orientation.
 •   E-skills are of crucial important, specifically programmes used for bookkeeping and
     accounting.




                                                                                           79
Table 13.6 Emerging skills and competences: Accounting & Finance, 2009-2020
                                                                                High-end Customer Hi-Wi-Fi/
                                                                                   Hi-Wi-Fi for Everyone
 Knowledge / hard skills                Legislative regulatory
                                        knowledge
                                        (Accounting standards;
                                        financial regulations; contract
                                        law)
                                        e-skills (accounting
                                        programmes)

 Social skills                          Team working skills
                                        Social perceptiveness
                                   Communication
                                   Networking
                                   Language
                                   Intercultural
 Problem solving skills            Analytical skills
                                   Interdisciplinary
                                   Initiative
                                   Multi-skilling
                                   Creativity
 Self management                   Planning
                                   Project management
                                   Stress & time management
                                   Flexibility
                                   Multi-tasking
 Entrepreneurship                  Understanding supplier &
                                   customers
                                   Business development
                                   Marketing skills
                                   Trend setting / spotting
 Management skills                 Strategic & visionary
                                   Coaching & team building
                                   Collegial management style
                                   Change management
                                   Project management
                                   Process optimizing
                                   Quality management
 Total emerging skills and competences                                                      Count: 10
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                         80
13.7 Sales & Marketing

Sales & marketing staff is responsible for managing customer relations, marketing the
products and managing sales activities. The global nature of the industry under the scenarios
envisaged requires strong language and intercultural skills. In addition, sales and marketing
work requires high level social skills to engage in extensive contacts with external parties
such as customers or service providers. These social skills are part of the set of soft skills that
are required in most professional jobs such as team working, communication, networking,
language and intercultural skills in addition to flexibility, creativity, multi-tasking and project
management skills.

With increasing market segmentation and niche markets emerging in the scenarios,
entrepreneurial skills such as spotting of market trends and opportunities become increasingly
important. Moreover, it will be very important to be able to translate market requirements
into product specifications.

While sales and marketing is not a science but an art, it is mostly learned through learning on
the job. Specific knowledge requirements relate to:

 •    Product knowledge, especially the technical understanding of products, in order to be
      able to serve clients.
 •    e-skills and particularly e-business skills as for most professional jobs are crucial and
      need to be up-to-date. Sales and marketing staff frequently works with specific IT
      programmes to manage client relationships / communication.
 •    With national differences in regulation of the sector, sales staff that sells products in
      international markets needs to be aware of differences in environmental and health and
      safety regulation to perform its tasks.
The relative share of sales and marketing is expected to be constant across both scenarios.
Nevertheless, it is expected that in the Hi-Wi-Fi For Everyone, the amount of sales and
marketing jobs will stabilise, while in the High-end Customer Hi-Wi-Fi sector employment in
marketing and sales will increase.




                                                                                                81
Table 13.7 Emerging skills and competences: Sales & Marketing 2009-2020
                                                                                      High-end Customer Hi-Wi-Fi/
                                                                                         Hi-Wi-Fi for Everyone
 Knowledge / hard skills                   Legislative / regulatory
                                           knowledge
                                           e-skills
                                           Product knowledge

 Social skills                             Team working skills
                                           Social perceptiveness
                                     Communication
                                     Networking
                                     Language
                                     Intercultural
 Problem solving skills              Analytical skills
                                     Interdisciplinary
                                     Initiative
                                     Multi-skilling
                                     Creativity
 Self management                     Planning
                                     Project management
                                     Stress & time management
                                     Flexibility
                                     Multi-tasking
 Entrepreneurship                    Understanding supplier &
                                     customers
                                     Business development
                                     Marketing skills
                                     Trend setting / spotting
 Management skills                   Client relationship management
                                     Coaching & team building
                                     Collegial management style
                                     Change management
                                     Project management
                                     Process optimizing
                                     Quality management
 Total emerging skills and competences                                                            Count: 20
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                         82
13.8 Support staff

Support staff should be understood here as being in support of all other job functions and to
improve work effectiveness. The category of support staff is defined here to include all other
support job functions than the ones that have already been described and not requiring tertiary
education. Most support staff functions are administrative related jobs. Key knowledge
required for these activities are up-to-date e-skills to function effectively in an administrative
environment (basic internet skills; spreadsheet and word processing skills; e-monitoring
skills).

In addition, a number of social skills is crucial to perform support functions in an
organisation well, especially team working skills and communication skills. Both will
become increasingly important in project driven environments. Project driven environments
require self-initiative to work independently, good planning, multi-tasking and stress & time
management. In international organisations also for support functions language and
intercultural skills become increasingly important.

While there is little difference in skill needs between the sub-sectors as support staff
comprises tasks generic to the sector, nevertheless a basic technical understanding of the
products is beneficial for people seeking employment in the sector.




                                                                                               83
Table 13.8 Emerging skills and competences: Support staff, 2009-2020
                                                                               High-end Customer Hi-Wi-Fi /
                                                                                  Hi-Wi-Fi for Everyone
 Knowledge                              e-skills

 Social skills                          Team working skills
                                        Social perceptiveness
                                   Communication
                                   Networking
                                   Language
                                   Intercultural
 Problem solving skills            Analytical skills
                                   Interdisciplinary
                                   Initiative
                                   Multi-skilling
                                   Creativity
 Self management                   Planning
                                   Stress & time management
                                   Flexibility
                                   Multi-tasking
 Entrepreneurship                  Understanding supplier &
                                   customers
                                   Business development
                                   Marketing skills
                                   Trend setting / spotting
 Management skills                 Strategic & visionary
                                   Coaching & team building
                                   Collegial management style
                                   Change management
                                   Project management
                                   Process optimizing
                                   Quality management
 Total emerging skills and competences                                                      Count: 9
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                         84
13.9 Metal and machinery workers


Metal and machinery workers include metal moulders, welders, sheet-metal workers,
blacksmiths, and tool-makers. In contrast to job functions described earlier, which require a
large and diverse set of soft skills, the core competences of metal and machinery workers
relate first and foremost to the technical knowledge required to perform the tasks of their
work. The technical nature of this job function makes it crucial to keep the technical
knowledge of workers up-to-date and to expand it towards promising market niches, such as
the medical products sector. As metal and machinery workers are also responsible for
overseeing the production process, knowledge about quality control skills is of increasing
importance, especially in the production of high-tech products such as optical products.
Knowledge of production relevant regulation such as WEEEm, RoHs, EuP and REACH is
also getting more important. Nevertheless, also for metal and machinery workers the changes
in work organisation require increasingly social skills related to team working and
communication skills.




                                                                                          85
Table 13.9 Emerging skills and competences: Metal and machinery workers, 2009-2020
                                                                                High-end Customer Hi-Wi-Fi/
                                                                                   Hi-Wi-Fi for Everyone
 Knowledge / hard skills                Legislative / regulatory
                                        knowledge (e.g. production
                                        relevant regulation such as
                                        WEEEm, RoHs EuP, REACH)
                                        e-skills
                                        Technical knowledge
                                        Product knowledge
                                        Product development
                                        Quality control skills

 Social skills                          Team working skills
                                        Social perceptiveness
                                   Communication
                                   Networking
                                   Language
                                   Intercultural
 Problem solving skills            Analytical skills
                                   Interdisciplinary
                                   Initiative
                                   Multi-skilling
                                   Creativity
 Self management                   Planning
                                   Stress & time management
                                   Flexibility
                                   Multi-tasking
 Entrepreneurship                  Understanding supplier &
                                   customers
                                   Business development
                                   Marketing skills
                                   Trend setting / spotting
 Management skills                 Strategic & visionary
                                   Coaching & team building
                                   Collegial management style
                                   Change management
                                   Project management
                                   Process optimizing
                                   Quality management
 Total emerging skills and competences                                                      Count:10
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                         86
13.10 Electric and electronic equipment mechanics and fitters

The most important core competence of electric and electronic equipment mechanics and
fitters is the technical knowledge required to perform the tasks of their work. The technical
nature of this job function makes it crucial to keep the technical knowledge of workers up-to-
date. This also includes knowledge of production relevant regulation and quality control
skills. However, also for metal and machinery workers the changes in work organisation
require increasingly social skills related to team working and communication skills.

Table 13.10 Emerging skills and competences: Electric and electronic equipment
mechanics and fitters, 2009-2020
                                                                                High-end Customer Hi-Wi-Fi/
                                                                                   Hi-Wi-Fi for Everyone
 Knowledge / hard skills                Legislative / regulatory
                                        knowledge
                                        e-skills
                                        Technical knowledge
                                        Product knowledge
                                        Product development
                                        Quality control skills
 Social skills                          Team working skills
                                        Social perceptiveness
                                   Communication
                                   Networking
                                   Language
                                   Intercultural
 Problem solving skills            Analytical skills
                                   Interdisciplinary
                                   Initiative
                                   Multi-skilling
                                   Creativity
 Self management                   Planning
                                   Stress & time management
                                   Flexibility
                                   Multi-tasking
 Entrepreneurship                  Understanding supplier &
                                   customers
                                   Business development
                                   Marketing skills
                                   Trend setting / spotting
 Management skills                 Strategic & visionary
                                   Coaching & team building
                                   Collegial management style
                                   Change management
                                   Project management
                                   Process optimizing
                                   Quality management
 Total emerging skills and competences                                                      Count: 9
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.



                                                                                                                         87
13.11 Precision workers and repairers

Precision workers and repairers include precision workers in metal and other materials,
precision-instrument makers and repairers. A distinction is made between precision
workers/makers, highly qualified technicians specialised in precision production, sometimes
working in protected clean rooms, and precision repairers, who are mainly active in
maintenance and repair, an activity with a relatively high level of standardisation. For both
the most import competence is technical knowledge of the work they do. It is very important
to keep the technical knowledge up-to-date and to acquire new knowledge in new, but
related, areas. Especially for the optical and precision products sector, expertise and
knowledge of precision instruments and works is crucial. This also applies to quality control
skills and product(ion) relevant regulation. Problem-solving skills including analytical and
interdisciplinary skills, initiative and multiskilling, as well as self-management (flexibility)
are key. However, also for precision workers and repairers the changes in work organisation
require increasingly social skills related to team working and communication skills.




                                                                                             88
Table 13.11 Emerging skills and competences: Precision workers and repairers, 2009-
2020
                                                             High-end Customer            High-end Customer
                                                                Hi-Wi-Fi and                 Hi-Wi-Fi and
                                                            Hi-Wi-Fi for Everyone        Hi-Wi-Fi for Everyone

                                                               Precision makers            Precision repairers
 Knowledge / hard             Legislative / regulatory
 skills                       knowledge
                              e-skills
                              Technical knowledge
                              Product knowledge
                              Product development
                              Quality control skills

 Social skills                Team working skills
                              Social perceptiveness
                              Communication
                              Networking
                              Language                                                          If working
                                                                                              internationally
                              Intercultural                                                     If working
                                                                                              internationally
 Problem solving skills    Analytical skills
                           Interdisciplinary
                           Initiative
                           Multi-skilling
                           Creativity
 Self management           Planning
                           Stress & time
                           management
                           Flexibility
                           Multi-tasking
 Entrepreneurship          Understanding supplier
                           & customers
                           Business development
                           Marketing skills
                           Trend setting / spotting
 Management skills         Strategic & visionary
                           Coaching & team
                           building
                           Collegial management
                           style
                           Change management
                           Project management
                           Process optimizing
                           Quality management
 Total emerging skills and competences                             Count: 11                    Count: 13
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                         89
13.12 Assemblers

Like in other production functions, the main competence of assemblers is the technical
knowledge of the job to be done. Central and Eastern Europe will develop into a specialised
assembling platform. Assembling in Europe will increasingly focus on the end-assembling of
products as well the assembling of special high-tech products for niche markets. Quality
control is one of the main skills needed. Changing work organisation will also require soft
skills related to team working and communication (see Table 13.12). Language skills can be
important especially for migrant workers, because they have to be well informed about the
safety & health regulations and all kinds of instructions. As there is a constant need for
increasing productivity and a strong time pressure, assemblers will need skills in stress &
time management.




                                                                                        90
Table 13.12 Emerging skills and competences: Assemblers, 2009-2020
                                                                               High-end Customer Hi-Wi-Fi /
                                                                                  Hi-Wi-Fi for Everyone
 Knowledge / hard skills                Legislative / regulatory
                                        knowledge
                                        e-skills
                                        Technical knowledge
                                        Product knowledge
                                        Product development
                                        Quality control skills

 Social skills                          Team working skills
                                        Social perceptiveness
                                   Communication
                                   Networking
                                   Language
                                   Intercultural
 Problem solving skills            Analytical skills
                                   Interdisciplinary
                                   Initiative
                                   Multi-skilling
                                   Creativity
 Self management                   Planning
                                   Stress & time management
                                   Flexibility
                                   Multi-tasking
 Entrepreneurship                  Understanding supplier &
                                   customers
                                   Business development
                                   Marketing skills
                                   Trend setting / spotting
 Management skills                 Strategic & visionary
                                   Coaching & team building
                                   Collegial management style
                                   Change management
                                   Project management
                                   Process optimizing
                                   Quality management
 Total emerging skills and competences                                                      Count: 11
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                         91
13.13 Labourers and operators

The number of production labourers in this sector is diminishing in Europe, as most of the
simple production activities have moved outside Europe or have been replaced by machines.
Future employment opportunities for this type of workers will be mostly in other positions
within the organisation which requires up-skilling and retraining towards future skill
requirements of, for instance, metal and machinery workers as well as precision workers and
repairers. With the pool of labourers getting much smaller, those that stay in the sector face
stronger skills requirements as well. A small replacement demand will continue to exist, with
the character of this job function changing, requiring more – even if basic - IT-skills, stress
management skills and a higher demand for flexibility. Quality control skills – product
control but also process-related (labour safety) - will need gradual updating, to reflect
increased product and safety demands.

Labourers outside production who are active in cleaning, catering (canteen) and (partly also)
general maintenance – also part of the miscellaneous category labourers - will increasingly
see their job outsourced to third party service providers; therefore, this type of job function
will shift to the service sector. new technology.




                                                                                            92
Table 13.13 Emerging skills and competences: Labourers and operators, 2009-2020
                                                                             High-end Customer Hi-Wi-Fi /
                                                                                Hi-Wi-Fi for Everyone
 Knowledge           Legislative / regulatory knowledge
                     e-skills
                     Technical knowledge
                     Product knowledge
                     Product development
                     Quality control skills
 Social              Team working skills
                     Social perceptiveness
                     Communication
                     Networking
                     Language
                     Intercultural
 Problem             Analytical skills
 solving             Interdisciplinary
                     Initiative
                     Multi-skilling
                     Creativity
 Self                Planning
 management          Stress and time management
                     Flexibility
                     Multi-tasking
 Entre-              Understanding suppliers customers
 preneurship         Business development
                     Marketing skills
                     Trend setting / spotting
 Management          Strategic and visionary
                     Coaching and team building
                     Collegial management style
                     Change management
                     Project management
                     Process optimizing
                     Quality management
 Total emerging skills and competences                                                        5
Note: shaded areas highlight specific skills and knowledge that will become relatively more important in the future, and
require up-skilling and knowledge upgrading. This does not mean that blank areas are irrelevant; rather here no change in
terms of up-skilling and knowledge upgrading is needed. The darker the area shaded the more important it is in the scenario.




                                                                                                                        93
                   Part III.

          Available Options to Address
Future Skills and Knowledge Needs, Conclusions
              and Recommendations




                                             94
Part III. Available Options to Address Future Skills and
Knowledge Needs and Recommendations - Guide to the reader

In the final third part of this report, a range of main strategic options (‘choices’) is reviewed,
including possible actions in education and training. The report concludes with a number of
conclusions and recommendations for the sector (individual firms, sector organizations,
others) and policy-makers at various levels, ranging from the EU to the local level. Part III
reflects steps 7 (Main strategic choices), 8 (Main implications for education and training) and
9 (Main recommendations) of the common methodology. Its contents are as follows: Chapter
14 highlights the various strategic choices in response to future skills and knowledge needs.
Chapter 15 focuses on specific implications for education and training. Chapter 16 concludes
by providing a number of key recommendations and conclusions.




                                                                                               95
14         Strategic choices to meet emergent skills and knowledge
           needs

14.1 Introduction

This chapter identifies the main strategic choices to meet the skills and knowledge needs
identified (step 7). It provides a framework to pick and select the most relevant strategic
choices – i.e. solutions to meet future skills and knowledge needs - available. Strategic
choices refer and relate to the medium- and longer term, even though emerging skills needs in
practice may also apply to the now and tomorrow. Essential in seeking appropriate solutions
is to keep this longer time perspective in mind. Rather than focusing on one single solution, a
set of linked strategic choices will in most cases be the best strategy to follow. Prioritising
both in time (what first, where to follow up) and in allocation of resources (budgetary focus)
followed by further fine-tuning is a clear necessity to guarantee that skills needs are targeted
and solved. Skill needs can be identified at various levels, ranging from assessments at the
national or even European sector level - which are by nature rather general - to more precise
assessments at the regional and company level. Especially for large enterprises not only the
identification of skills needs but also the search for adequate solutions will be an integral part
of an overall longer-term business strategy. Some solutions will be found within the company
itself, for instance by reorganising functions within or between plants, by offering (re)training
trajectories and by active global sourcing of personnel. For SMEs and especially for micro-
enterprises14 such longer-term, more strategic human resource management often will be
more difficult to organise and operationalise. It should be emphasized that at all possible
levels identified different actors need to act to address skills needs and offer solutions and
preferably also in close concert. These can be individual firms, organised interests at the
sector level (employers and employees), but also others. Local, regional and national
governments have also a important role to play. This chapter offers first of all a better insight
in the ‘menu’ of possible strategic choices (section 14.2). It also provides for a framework
that can identify skills needs at the appropriate level and helps to decide which should be the
actual choices to be made (see section 14.3). This framework is subsequently applied to the
computer, electronics and optical products sector (section 14.4).

14.2 Possible strategic choices

The possible strategic choices contained in this chapter refer to the strategic choices
originally proposed by Rodrigues (2007: 42) as well as a number of other, additional choices.
Whereas strategic choices mostly refer to the medium and longer term, most of the choices
mentioned can also be implemented in the short run, to ‘mend’ existing skills shortages
and/or skills gaps. Each of the solutions at hand differs in whether or not it can resolve direct
skills shortages and/or gaps. A longer term horizon, however, means that there is possibility
of adapting, steering and fine-tuning the available solutions towards a more optimal
allocation of skills supply and demand. In view of the time horizon, the period up to 2020, the
strategic choices and instruments with a more long-term impact especially need to be
addressed. Identification of possible solutions obviously is not enough. Concrete initiatives,
policy and strategic decisions need to be taken at all appropriate levels with each actor having
a different responsibility and a different role to play.


14
     Defined as firms with less than 10 employees.


                                                                                               96
Strategic choices to meet future skills needs need to be taken by a number of actors and at
different levels (firm, local, regional, national, sectoral). For obvious reasons, firms are an
important player in finding solutions for the skills needs – both in volume (skills shortages)
and in matching any existing skills gaps. Companies avail of a number of options to meet
their skills needs. These include:

       A. Recruiting workers from other sectors
       B. Recruiting workers from other Member States
       C. Recruiting workers from non-Member States
       D. Recruiting unemployed workers with or without re-training
       E. Recruiting young people coming from the education system, with or without re-
          training (first job recruits)
       F. Training employed workers
       G. Changing the work organisation (including network collaboration and mergers)
       H. Outsourcing and offshoring.
Sectoral organisations, educational institutions and governments also have a role to play.
They will be the prime actors in addressing the following options:

       I. Changing vocational education
       J. Designing and offering new courses (continuing vocational education and training)
       K. Providing information about jobs and (emerging) skills: career guidance; updating job
          profiles regularly.
       L. Improve the image of the sector (joint action of companies together)
       M. Stronger cooperation with the industry (internships, company visits for participants in
          education, image improvement).15
A more detailed description of these strategic options can be found in annex III. Whether
these strategic options are feasible and viable depends on a number of factors. In order to
discuss and select from the available list of strategic options, one should first - as described in
the introduction - know whether and when skills needs are indeed likely to arise, both in
quantitative (number of job functions) and in qualitative terms (what knowledge and skills).
An important question that needs to be addressed first is at what level and to whom the skills
needs question applies. Obviously for an individual firm different information is required for
identifying these needs and taking the right action than for a national ministry or a training
institute.

The identification of possible strategic choices would in principle require extensive and
detailed future analysis at the Member State and preferably also the regional level of skills
and knowledge demand and supply patterns by job function and sub-sector, in a similar way
and along the steps provided by the methodology of this study so far. The methodology and
step-wise approach followed are applicable at the national and regional level of analysis.
Ideally, these results should be complemented by the results of labour market model forecasts
to corroborate results. Such an analysis would also need to include an assessment of the
numbers and skills composition of currently being educated, i.e. an assessment of all cohorts

15
     A more detailed description of these options can be found in annex I.


                                                                                                97
of primary, secondary and tertiary pupils and students (and their skills potential) currently in
the educational system and arriving at the labour market in the oncoming years. It would need
a thorough assessment of the current educational and training system itself, including the
already decided changes herein for the oncoming years, to see whether the system as it is now
in place is able to satisfy the prevailing and future new skills demands both in terms of
numbers of new potential recruits and in terms of skills and knowledge.

14.3 Matching future skills and knowledge needs by making the right choises

In order to address the identified future skills and knowledge needs in an encompassing and
timely manner, appropriate joint action is needed by all stakeholders, including the industry
(firms, sector organisations and social partners), training and education institutes,
intermediary organisations and, last but not least, government at all levels (EU, national,
regional and local). Collaboration and co-operation between stakeholders will be needed, at
all decision-making levels, in order to agree on and implement a package of feasible
solutions. In order to prepare for this, timely, targeted and reliable information is essential.

This section presents a targeted short-cut strategic options decision tool to enable and support
decision-makers in making the right (mix of) choices, supported by appropriate and reliable
information on actual needs, possible choices and stakeholders to be involved. The strategic
options decision tool is aimed to provide answers and solutions at the job function level and
consists of a shortlist of a number of key questions - a concise menu of choice -, with answers
providing decision-relevant information about the need and viability of available options. The
questions need to be answered at the national, and where relevant at the regional level so as to
map and identify the specific sector needs. The decision tool can also be used at the level of
the firm. New job function information (e.g. new upcoming functions) can be added where
thought relevant.

The key question list – consisting of six ‘framing’ questions, followed by option-specific
questions - should be filled in for each job function. The ‘framing’ questions constitute a
summary of main expected quantitative and qualitative skills needs developments. The filling
in of the list should, however, only be done on the basis of an informed discussion between
several stakeholders involved, representing together an informed body of knowledge on the
various aspects at stake, including labour market developments and prospects at the sub-
sector level, skill and knowledge requirements at job function level and developments in and
make up/orientation of the educational and training system.

Key questions for identifying skills needs
Question 1. Is the demand for workers expected to decrease or increase between now and
2020? (both related to market prospects and replacement demand due to ageing)

If decreasing, there is probably less need for recruiting workers from other sectors and (non-)
Member States and less need for recruiting unemployed.

If increasing, analyse whether less radical options are enough to meet demand or whether
options should be chosen like recruiting workers from other sectors and (non-) Member
States and recruiting unemployed. [Note: see Table 12.1 and Table 12.2 for estimated volume
effects per scenario.]

Question 2. Are the required qualitative skills expected to be rather stable between now and
2020?


                                                                                             98
If there are not many changes in required competences, there is probably no need to apply
many strategic options. Please focus on the options that are most effective.

If many competences are changing, there is probably a need to apply many strategic options.
Create a package of strategic options to meet skills needs. [Note: see Table 13.2 and
following for the number of competences changing per job function per scenario.]

Question 3. Do SME’s and especially small companies (including micro enterprises) play a
large role in the sector?

       If yes, several options (like recruiting) are less viable for companies themselves as it
       is often difficult for small companies to organize this. If this is the case, sector
       organisations or intermediary organisation might play an important role in helping to
       match supply and demand. Another solution could be found in changing the work
       organisation. Through cooperation or mergers, for instance, the relevant scale can be
       increased which makes it easier to use these options. The same holds, more or less, for
       the organisation of training and re-training. Larger (associations of) companies have
       less difficulties to organise this and the need for support from other actors is lower.
       [Note: see Table 3.9 for number of firms per size class]

Question 4. Are companies in general active on Member State level, EU level or global level?

       Companies who are active on a larger regional level will have, in general, more
       opportunities to use the option of recruiting workers from other Member States (for
       companies active at the EU level) and the option recruiting workers from non-
       Member States (for companies active at the global level). The same holds for the
       option offshoring. [Note: see chapter 3]

Question 5. Are workers in a job function in general low-educated?

       If yes, training is less easy to implement as a viable option as difficulties arise in
       organising this, while the need for training might be even higher. [Note:see Table 3.14
       to 3.16, for education shares]

Question 6. Are workers in a job function in general old (i.e. older than the average age in the
subsector and compared to other sectors)?

       If yes, training is less easy to implement as a viable option as difficulties arise in
       organising this and less new knowledge endogenously enters the companies, while the
       need for training might be even higher.

Key questions for identifying suitable options and relevant acting stakeholders
The six questions form the first part of the short-cut approach. The second part discusses the
viability of strategic options to tackle and solve emergent skills and knowledge needs for
each of the job functions identified. It confronts the list of available strategic options with the
analysis of quantitative and qualitative developments on headlines based on the preceding six
questions. For each job function identified an assessment is made on whether the available
strategic options are relevant or not, and who should be prime actors to change the current
situation into a more favourable direction. If the strategic option is considered relevant, a
“yes” is filled in, else a “no” is included. If the strategic option is dependent on specific



                                                                                                99
characteristics of the sub-sector or components thereof, this is included in the table. For
example, if recruiting workers from other Member States is only an option for large
companies a “Yes, but only for large companies” will be included. Characteristics that are
dealt with in the table are based on the six question analysis, representing:

   o The change in volume (as a reference we include the most challenging scenario in
     terms of change required)
   o The change in skills (as a reference we include the most challenging scenario, which
     is often the scenario with the largest change in skills and knowledge needs)
   o Education level
   o Age of the workforce
   o Scale of the company and region the company is working in.
In principle, the following tables can be made scenario-dependent. In the descriptions below,
the Hi-Wi-Fi for Everyone scenario and the High-end Customer Hi-Wi-Fi scenario have been
taken as the point of reference as the most demanding and dynamic in terms of up-skilling,
knowledge upgrading and change.

14.4 Managers

Table 14.1 presents viable strategic options for emergent competences of managers in both
scenarios, the Hi-Wi-Fi for Everyone scenario as well as in the High-end Customer Hi-Wi-Fi
scenario. The options are, first of all, recruitment of mangers from other sectors as well as,
secondly, from other member and non-Member States. Via recruiting workers from other
sectors the workforce of the sector increases in generic skills such as social skills, self
management skills, E-skills and general management skills. However, workers with sector
specific skills including legislative competences, business development skills, know-how on
understanding clients and suppliers as well as knowledge about global supply chain
management, quality management and intellectual property management are difficult to
recruit from other sectors. Recruiting workers from other States (Member or non-Member) is
a practice already implemented especially by large firms. In some countries the need for
managers with outstanding strategic and visionary leadership skills is met by hiring managers
from the United States (EIGT, 2004).

In formulating a recruitment strategy for managers from other sectors firms need to widen
their recruitment horizon by incorporating younger groups as well as the female management
potential. In general, the participation of women within the sector and, in particular, in
management functions is still low (see Part I of this report). By making use of this potential
within the industry, sector leadership and management styles could be changed due to gaining
fresh ideas and vision. (Frenzel, 2001). The electronic, computer and optical sector is still
dominated by men and up to now mangers are recruited mainly within the sector (EIGT
2008: 135). Thus, well developed traineeships and apprenticeships specifically targeted at
younger groups and females are a viable option.

New recruits need to be trained in order to gain sector specific skills such as profound
understanding of the needs of consumers and suppliers, business development skills as well
as marketing, quality management, global supply chain management and intellectual property
skills. The emergent demand for new and sector specific skills can better be met by designing
and offering accurate up-to-date courses which are based on a solid co-operation between all


                                                                                          100
relevant stakeholders. Since trainings should be accurately fitting, a co-operation between
stakeholders is recommended. This option is of great importance to SMEs, since they are not
often linked to universities (EIGT, 2004: 145).

SMEs play a key role as employers in the sector: the total workforce of the sector is divided
almost equally between SMEs and large firms. In the optical products sub-sector, for
instance, SMEs are predominant (see Part I of this report).

Due to a general good reputation of managers and due to the availability of this occupational
function at the labour market the demand for improving the image of this occupational
function is not really required.




                                                                                         101
Table 14.1 Strategic options Managers
 1.   What is the maximum volume effect?                   Increase
 2.   What is the maximum change in skills?                18
 3.   Do SMEs play a large role?16                         Yes
 4.   Is the sector national/EU/global?                    Global
 5.   Is the workforce old?                                No
 6.   Is the workforce low educated?                       No
 Option                                                    Is this option viable?                   Actors1
 A. Recruiting workers from other sectors                  Yes, mainly for general management       C
                                                           skills
 B. Recruiting workers from other Member States            Yes, mainly for large companies          C
 C. Recruiting workers from Non-Member States              Yes, mainly for large companies          C, G
 D. Recruiting unemployed with or without re-training      Yes, but only in rare cases              C, E
 E. Recruiting young people from the education system      Yes, mainly through apprenticeships      C, E
                                                           and placements for students
 F. Training and re-training employed workers              Yes, in-house promotion and further      C, E
                                                           training
 G. Changing work organisation                             No, limited in scope for skills          -
                                                           shortages in this occupational
                                                           function
 H. Outsourcing and offshoring                             No, because activities belong to the     -
                                                           core of the companies. Only viable
                                                           for few junior management functions
 I. Changing vocational education                          No                                       -
 J. Designing and offering new courses                                                       17
                                                           Yes, mainly aiming at “softer”           C, E
                                                           skills. Flexible forms of training are
                                                           essential.
 K. Providing information about emerging skills            Yes, mainly about emerging “softer”      C, E, U
                                                           skills and sector specific
                                                           qualifications
 L. Improve the image of the sector                        No, not necessary for this occupation    -
                                                           functions
 M. Stronger cooperation between stakeholders              Yes, in respect to a stronger            C, S, E, G,
                                                           diversification of workforce             I, U
                                                           (women, youth)
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




16
   SMEs play a key role as employers in the sector: the total workforce in the sector is divided almost equally
   between SMEs and large firms. In the optical subsector, for instance, SMEs are predominant. (see part I).
17
   “Softer” skills refer to all skills with the exception of the technical skills (hard skills) in the sector.


                                                                                                              102
14.5 Computer Professionals


Table 14.2 shows strategic options for emergent competences of computer professionals.
Recruitment of workers from other sectors is a viable option since also generic IT skills are
required for IT systems and IT support, maintenance and service. However, those tasks are
often outsourced. Outsourcing is also a strategic option for computer professionals designing
and integrating different electronic systems (ILO, 2007: 48). The demand for computer
professionals designing IT systems is somewhat higher in the scenario High-end Customer
Hi-Wi-Fi than in the other scenario. The demand for computer professionals applying and
supporting IT systems is expected to stabilise in both scenarios. Due to expected skills
shortages outsourcing is a more probable option in the High-end Customer Hi-Wi-Fi
scenario.

In the High-end Customer Hi-Wi-Fi scenario the recruitment of workers from non-Member
States, especially from Asia (Japan, Korea, Philippines) and from the United States as well as
the recruitment of young people released by the education system is an important alternative
to meet the knowledge demand and the needs for specific hard skills required in the sector.

Training of hard and soft skills is essential, especially for computer professionals. Training
should include object oriented computer programming languages as well as updates on
software development. In addition, the demand for knowledge in respect to the relationship
between hardware and software seems to increase for computer professionals in the sector
(EMTA, 2001: 17). Communication skills such as internal and external customer related
communication, project and time management skills are of great importance in both
scenarios.

Due to individualisation and mass customisation in the scenario High-end Customer Hi-Wi-
Fi and due to the specialisation in niche markets in the scenario Hi-Wi-Fi For Everyone,
software development and application is getting more specialised. Hence, training providers
face difficulties to keep pace with software developments and the supply of adequate courses.
The development and offering of such courses should build on a solid co-operation between
all relevant stakeholders. Flexible (e.g. modular) forms of training are a strategic option to
meet the rapid changing demand of technical skills in the scenarios. A strong co-operation
between companies (especially SMEs) and training organisations is a necessity to guarantee
that training is up-to-date and fits the demands.




                                                                                          103
Table 14.2 Strategic options Computer professionals
 1. What is the maximum volume effect?                 Increase for IT system developers, maintain for IT
                                                       system appliers and supporters
 2. What is the maximum change in skills?              13 for IT system appliers and supporters and 15 for
                                                       IT system developers
 3. Do SMEs play a large role?                         Yes
 4. Is the sector national/EU/global?                  Global
 5. Is the workforce old?                              No
 6. Is the workforce low educated?                     No
 Option                                                Is this option viable?                  Actors1
 A. Recruiting workers from other sectors              Yes, mainly for IT application and      C
                                                       support and especially for young
                                                       workers
 B. Recruiting workers from other Member States        Yes, for IT application and support     C
                                                       as well as for IT design functions
 C. Recruiting workers from Non-Member States          Yes, more probable for IT design        C, G
                                                       functions (e.g. Asia)
 D. Recruiting unemployed with or without re-          Yes, mainly for IT application and      C, E, I
    training                                           support but limited in scope. Less
                                                       viable for IT design as training will
                                                       be needed
 E. Recruiting young people from the education         Yes, for both functions                 C, E
    system
 F. Training and re-training employed workers          Yes, for “softer” and hard skills        C, E
 G. Changing work organisation                         No                                       -
 H. Outsourcing and offshoring                         Yes, more viable for ITapplication       C
                                                       and support and programming, not
                                                       for designing and integrating
                                                       complex systems
 I. Changing vocational education                      Yes                                      C, E, S, G, I,
                                                                                                U
 J. Designing and offering new courses                 Yes, in respect hard and soft skills     C, E, I
                                                       for computer professionals in the
                                                       sector. Flexible forms of training are
                                                       essential. Life-Long-Learning is
                                                       essential
 K. Providing information about emerging skills        Yes, mainly in respect to emerging       C, E, I, U
                                                       “softer” skills and sector specific
                                                       qualifications. Career guidance is
                                                       needed
 L. Improve the image of the sector                    Yes, for women this is important         C, S, E, I, G,
                                                                                                U
 M. Stronger cooperation between stakeholders           Yes, in order to better match sector    C, S, E, G, I,
                                                        specific skills and general             U
                                                        knowledge
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




                                                                                                             104
14.6 Engineers

Table 14.3 presents strategic options for emergent competences of engineers. Engineers are
the most important job category in the electronics, computer and optical sector. No major
employment growth is expected for engineers active in production processes, but an increase
in employment is expected for R&D engineers . They form the fundament for growth in both
scenarios. For both types of engineers gaps in skills and competences will occur, but
especially for R&D engineers. Consequently, all strategic options pointed out in the table are
viable. The strategic options vary between the different engineering functions such as design
engineers, electronic engineers and production engineers (control, equipment maintenance).
Recruiting engineers from other sectors as well as recruiting unemployed engineers with
training should be the main strategic option for electronic or production engineers. Thus,
recruiting engineers from the chemical and biological sector, in particular in nano-optics and
nano-electronics, is an alternative for the designing of electronic and optical components,
even if specific skills are needed (Abicht et al., 2006). Another choice is to re-train electric
and electronic equipment mechanics and up-skill parts of this occupational group (the volume
in employment in this group is expected to decrease in both scenarios).

Recruiting workers from other Member States and, in particular, from non-Member States,
recruiting young people released by the education system as well as training of employed
workers are other possibilities. Due to limited resources, SMEs have difficulties to attract
workers from other countries. Consequently, offering training for employed workers is of
great importance for SMEs. Furthermore, changes in work organisation are an important
strategic alternative. In the optical industry, in which SMEs are prevalent, job-rotation
systems are already in place in order to train engineers and to obtain multi skills. However,
the method is not very frequently used (VDI, 2004: 56). In a global supply chain international
team work as well as project work assists in overcoming skills gaps and shortages in design,
product development and production. For the same reason outsourcing and offshoring is an
option.

Next to the strategic option of recruiting young people released by the education system
another option exists: attracting young people of both sexes to conclude engineering /
technical studies. The image of technical occupations is not as good as it should be. A co-
operation between all relevant stakeholders can assist in improving the image and, therefore,
is important in both scenarios.

The main driver of the sector is the rapid technological change. However, the VET systems
do not adjust as quickly. Thus, the rapid technological progress in production is confronted
with the slow absorption by the VET systems. Consequently, a modernisation of the VET
system with modifications in respect to more flexible and modular training offers is essential.
Tailor-made modular courses for engineers in the sector need to be adjusted and made
accessible for the specific target groups such as younger groups, women, older workers, etc.
Next to training offers on technical hard skills (especially for systems design) courses should
also be provided on project management, team work and communication. According to the
scenarios, self management training and courses to enhance skills on problem solving should
be expanded in future. In addition, engineers should be stimulated in their entrepreneurship
skills, especially in relation to understanding the customer and spotting trends. Team working
and communication skills are of great importance and, therefore, should be an integral part of
the                                                                                   trainings.


                                                                                            105
Table 14.3 Strategic options Engineers
 1. What is the maximum volume effect?                      Increase, especially for R&D engineers
 2. What is the maximum change in skills?                   14 (production), 20 (R&D)
 3. Do SMEs play a large role?                              Yes in R&D, not really in production
 4. Is the sector national/EU/global?                       Global
 5. Is the workforce old?                                   Yes for production, No for R&D
 6. Is the workforce low educated?                          No
 Option                                                     Is this option viable?                   Actors1
 A. Recruiting workers from other sectors                   Yes for production. The option is not    C
                                                            so viable for design engineers
 B. Recruiting workers from other Member States             Yes, for all functions. Especially in    C
                                                            NMS: higher education level, more
                                                            women
 C. Recruiting workers from Non-Member States               Yes, in respect to recruitments from     C, G
                                                            Asia and the USA. The option is
                                                            limited as Europe is not attractive
                                                            (a.o. lower wages for researchers)
 D. Recruiting unemployed with or without re-training       Yes mainly for production. The           C, E, I
                                                            option is limited in scope as training
                                                            is needed.
 E. Recruiting young people from the education system       Yes, especially for R&D engineers        C, E, I, S
                                                            Apprenticeships can be an important
                                                            mean of training young engineers.
 F. Training and re-training employed workers               Yes, for soft and hard skills in all     C, E, S, I
                                                            functions                                (consultan
                                                                                                     ts)
 G. Changing work organisation                             Yes, an option for large companies        C, I
                                                           and SMEs in order to match hard and       (consultan
                                                           soft skills                               ts)
 H. Outsourcing and offshoring                             Yes, for SMEs and large firms.            C, I
                                                           However, the option fits mainly in        (consultan
                                                           both scenarios for production but not ts)
                                                           for product development.
 I. Changing vocational education                          Yes, for a better matching of the         C, S, E,
                                                           demand of the industry and the            G, I, U
                                                           supply of training.
 J. Designing and offering new courses                     Yes, hard and soft skills. Flexible       C, E, I, S
                                                           forms of training are essential.
 K. Providing information about emerging skills            Yes, mainly in respect to emerging        C, E, I, U
                                                           soft skills and sector specific
                                                           qualifications
 L. Improve the image of the sector                        Yes, in order to attract more             C, S, E,
                                                           personnel (especially women) to           G, I, U
                                                           technical occupations in the sector
                                                           and to overcome skills shortages
 M. Stronger cooperation between stakeholders              Yes, in order to design coherent          C, S, E,
                                                           measures for attracting more              G, I, U
                                                           personnel to engineering and to
                                                           diversify the workforce (women,
                                                           youth). In addition, yes, to improve
                                                           the matching of supply and emerging
                                                           demands.
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




                                                                                                               106
14.7 Supply Chain Managers

Since Supply Chain Management (SCM) is a new occupational function, only few skilled
people are available (EIGT, 2004: 117). As global supply chain management also appears in
other sectors, e.g. the textile industry, recruiting SCM managers from other sectors is an
option. In doing so workers with intercultural and language skills (Asia, in particular China,
is one of the important production locations) as well as workers with other non-sector specific
skills can be recruited. In order to fill the gaps of additional knowledge required such as
know-how on legal, tax and financial issues companies can choose to recruit workers from
other sectors and train them on sector-specific components.

The recruitment of workers from other member and non-Member States is a viable
alternative. However, since university courses on SCM have been set up only recently, few
people with fitting degrees are available. In order to meet the demand, sector specific
business management courses for training on the job should be developed and existing sector-
specific training possibilities of global SCM expanded in numbers. To precisely address the
companies’ needs a solid co-operation is required between all relevant stakeholders. In order
to attract the few skilled SCM work force, the visibility of the sector should be improved,
especially among students.

Changing the work organisation is also a viable possibility to meet skills requirements related
to SCM. Job-rotation, job enlargement and job enrichment could help SCM managers to gain
the different technical skills (e.g. logistics, accounting) and soft skills like project
management skills. The interdisciplinary character of SCM makes this possible. Outsourcing
and offshoring are other strategic options as some OEM and EMS companies already deliver
this service (e.g. IBM). Nevertheless, this is not a suitable solution for all companies due to
the inter-sectoral competition and the sensitivity in respect to strategic information.




                                                                                           107
Table 14.4 Strategic options Supply Chain Managers
1.   What is the maximum volume effect?                  Increase
2.   What is the maximum change in skills?               10
3.   Do SMEs play a large role?                          Yes
4.   Is the sector national/EU/global?                   Global
5.   Is the workforce old?                               No
6.   Is the workforce low educated?                      No
Option                                                   Is this option viable?                   Actors1
A. Recruiting workers from other sectors                 Yes, but sector specific training is     C, E
                                                         needed
B. Recruiting workers from other Member States           Yes, but limited in scope due to skill   C
                                                         shortages
C. Recruiting workers from Non-Member States             Yes, but limited in scope due to         C, G
                                                         skills shortages and relatively low
                                                         wages in Europe
D. Recruiting unemployed with or without re-training     No, the option is not realistic due to   -
                                                         less qualified personnel
E. Recruiting young people from the education system     Yes, but sector specific training is     C, E
                                                         needed
F. Training and re-training employed workers             Yes, an option in order to meet the      C, E
                                                         emergent hard and soft skills
G. Changing work organisation                            Yes, for a better matching of the        C
                                                         hard and soft skills. More viable for
                                                         large firms due to the distinctive
                                                         diversification of the division of
                                                         labour in large firms.
H. Outsourcing and offshoring                            Yes, the option is viable for all SCM    C
                                                         as well as for parts of it.
I. Changing vocational education                         Yes, in order to increase the supply     C, E, I, S,
                                                         of SCM as well as sector specific        G, U
                                                         courses
J. Designing and offering new courses                    Yes, mainly for enhancing sector         C, E, I
                                                         specific and soft skills. Flexible
                                                         forms of training are essential.
K. Providing information about emerging skills           Yes, in order to better match skills     C, E, I, U
                                                         supply and demand..
L. Improve the image of the sector                       No, not necessary for this               -
                                                         occupational function
M. Stronger cooperation between stakeholders             Yes, in order to improve the             C, S, E, G,
                                                         matching of skills supply and            I, U
                                                         emerging demand.
Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




                                                                                                            108
14.8 Accounting & Finance

Since emerging skills on accounting and finance, in particular legislative and regulatory
knowledge of international nature as well as e-skills are universal skilled workers can be
recruited from other sectors. Workers with e-skills can be recruited from other countries,
amongst the group of young people and from the group of the unemployed. Given that the
demand for accounting and finance professionals is expected to rise in the High-end
Customer Hi-Wi-Fi scenario, training should be offered for the existing workforce. As
regulatory and legislative knowledge often is country-specific relevant training should to be
offered when recruiting workers with accounting and finance skills from other states within
or outside the EU. Nevertheless, recruiting skilled workers from other Member States is a
viable option for operations in the home state of recruits. In addition, outsourcing of
accounting and finance for SMEs as well as offshoring of minor accounting duties is a
possible strategic option to face the growing demand for skills.

Recruiting skilled workers from countries or markets other than the home market of the
recruit is a less viable option due to expected deficits in national accounting regulation. If
SMEs only operate on domestic markets this strategic option is even less probable for SMEs.
Recruitment of workers from other states can be made more attractive via developing and
offering training programs on international laws and rules. Modifications in vocational
education (e.g. via tailor-made courses), up-to-date information about emerging skills,
improvements of the image of the sector as well as solid co-operation between all
stakeholders are not the most pressing strategic options (as attracting personnel in this
occupation function is not difficult in the sector). Still, updating courses to the latest
developments in accounting should be provided. In addition, the sector should improve its
visibility for accounting and finance specialists. However, the need is not as high as for
technical occupations (engineers and mechanics).




                                                                                          109
Table 14.5 Strategic options Accounting & Finance
 1.   What is the maximum volume effect?                  Increase/maintain
 2.   What is the maximum change in skills?               10
 3.   Do SMEs play a large role?                          Yes
 4.   Is the sector national/EU/global?                   Global
 5.   Is the workforce old?                               No
 6.   Is the workforce low educated?                      No
 Option                                                   Is this option viable?                   Actors1
 A. Recruiting workers from other sectors                 Yes, a viable option due to sector       C, E
                                                          independent skills.
 B. Recruiting workers from other Member States           Yes, but limited due to national         C
                                                          accounting regulation. More viable
                                                          for large firms or Socieatas
                                                          Europaea.
 C. Recruiting workers from Non-Member States             Yes, but limited due to national         C, G
                                                          accounting regulation. More viable
                                                          for large firms and Socieatas
                                                          Europaea.
 D. Recruiting unemployed with or without re-training     Yes, but limited in scope (training is   C, E, I
                                                          needed).
 E. Recruiting young people from the education system     Yes                                      C, E
 F. Training and re-training employed workers             Yes                                      C, E
 G. Changing work organisation                            No                                       -
 H. Outsourcing and offshoring                            Yes, an option for some functions        C
 I. Changing vocational education                         No                                       -
 J. Designing and offering new courses                    No, courses are not needed (if at all    -
                                                          in order to increase soft skills)
 K. Providing information about emerging skills           No, not necessarily needed               -
 L. Improve the image of the sector                       No, not needed for this occupational     -
                                                          function
 M. Stronger cooperation between stakeholders             No, not necessary.                       -
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




                                                                                                             110
14.9 Sales & Marketing

Table 14.6 presents viable options for sales & marketing. Nearly all options are more or less
viable.

In the High-end Customer Hi-Wi-Fi scenario the occupational functions for sales and
marketing are expected to increase in volume whilst in the Hi-Wi-Fi for Everyone scenario a
stable volume of employment is likely. The scenarios do not differ in respect to emergent
skills and competences. The majority of the emerging skills are genuine marketing and sales
skills, only few are of sector-specific nature such as knowledge on legal regulatory and
product knowledge. The emerging skills needs are expected to be met by offering training on
and off the job internal and external.

Thus, all options are viable such as recruiting sales and marketing professionals from other
sectors, Member States and non-Member States, young people released by the education
system and unemployed if offering training. Outstanding knowledge on the product as such,
the ability to apply the knowledge to different branches (automotive, aerospace,
telecommunication, etc.), excellent communication skills and information on customer needs
is of great importance in the scenario High-end Customer Hi-Wi-Fi for EMS. The same
applies to marketing and sales professionals of ODM even if ODM focuses on the end-user.
Because of the strong mass customisation of products, customer needs have to be spotted
more carefully and latest consumer trends have to be identified regularly.

Experience is key to some sector-specific skills like sales conversation. Thus, practical
aspects should be integrated into training and university courses. Further training can also be
organized in-house and should integrate real case studies. Placement programmes are an
adequate action taken by the industry to overcome practice deficits of students, in particular if
the programmes are developed jointly by the industry and training providers. Furthermore, a
need to increase e-business skills is observed in the sector which easily can be met by
integrating e-business contents into existing vocational training courses (EIGT, 2004: 132).




                                                                                             111
Table 14.6 Strategic options Sales & Marketing
 1.   What is the maximum volume effect?               Increase
 2.   What is the maximum change in skills?            20
 3.   Do SMEs play a large role?                       Yes
 4.   Is the sector national/EU/global?                Global
 5.   Is the workforce old?                            No
 6.   Is the workforce low educated?                   No
 Option                                                Is this option viable?                   Actors1
 A. Recruiting workers from other sectors              Yes, but sector specific knowledge       C, E
                                                       and training is needed.
 B. Recruiting workers from other Member States        Yes, a viable option for strategic and   C
                                                       operative marketing.
 C. Recruiting workers from Non-Member States          Yes, a viable option for strategic and   C, G
                                                       operative marketing.
 D. Recruiting unemployed with or without re-          Yes, but limited in scope                C, E, I
    training
 E. Recruiting young people from the education         Yes                                      C, E
    system
 F. Training and re-training employed workers          Yes, especially e-business skills need   C, E
                                                       to be increased.
 G. Changing work organisation                         Yes, in order to strengthen soft and     C
                                                       hard skills
 H. Outsourcing and offshoring                         Yes                                      C
 I. Changing vocational education                      No                                       -
 J. Designing and offering new courses                 Yes, courses need to be offered          C, E, I
                                                       regarding sector specific knowledge
                                                       and e-business skills. Flexible forms
                                                       of training are essential.
 K. Providing information about emerging skills        Yes                                      C, E, I, U
 L. Improve the image of the sector                    No, not necessary.                       -
 M. Stronger cooperation between stakeholders          Yes, to order to improve the             C, S, E, G, I,
                                                       matching of skills supply and            U
                                                       emerging demands.
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




                                                                                                             112
14.10 Support staff

In Table 14.7 strategic options for emergent competences related to support staff are
presented. In both scenarios this occupational function is expected to decrease. Consequently,
skills gaps will be more prevalent than skills shortages. However, basic skills required in this
function, such as administrative skills as well as basic internet, spreadsheet and word
processing competences are available in other sectors. Thus, recruiting workers from other
sectors is a feasible option. Recruiting workers from other states (within or outside the EU) is
another alternative. Disadvantages for recruiting workers from other states are the (often)
high hiring costs as well as cultural barriers and missing language skills. Job agencies can
play an important role here in recruiting support staff. Outsourcing and offshoring of some
back office tasks (e.g. in accounting: customer documentation) is viable and, therefore,
already practiced by enterprises. In both scenarios skills related to support international
operating project teams will increase in importance. Support staff capable to perform such
tasks can be recruited from other international operating sectors. Depending on the specific
job profile basic technical skills will be required next to language and intercultural skills.
Basic technical training for support staff should be developed jointly by training providers
and sector organisations in order to meet the demand.

Finally, recruiting of unemployed is a viable option for this sector since some unemployed
have the generic skills required. However, training should be offered in respect to the most
pressing skills in the scenarios like e-skills, social skills, self management skills and
initiative. Despite the fact that emergent skills for support staff, generally speaking, are not as
pressing as emergent skills for engineers a general up-skilling of the workforce is required in
both scenarios.




                                                                                               113
Table 14.7 Strategic options Support staff
     1.   What is the maximum volume effect?           Decrease
     2.   What is the maximum change in skills?        9
     3.   Do SMEs play a large role?                   Yes
     4.   Is the sector national/EU/global?            Global
     5.   Is the workforce old?                        No
     6.   Is the workforce low educated?               Mainly
 Option                                                Is this option viable?                  Actors1
     A. Recruiting workers from other sectors          Yes, in order to meet general skills    C, E, I
                                                       demands (e.g. administrative skills)
     B. Recruiting workers from other Member           Yes, but limited in scope due to        C, I
        States                                         language barriers
     C. Recruiting workers from Non-Member             Yes, but limited in scope due to        C, I, G
        States                                         language barriers
     D. Recruiting unemployed with or without re-      Yes, together with training for         C, E, I
        training                                       certain skills
     E. Recruiting young people from the education     Yes                                     C, E
        system
     F.   Training and re-training employed workers    Yes, especially regarding soft and e-   C, E
                                                       skills
     G. Changing work organisation                     No                                      -
     H. Outsourcing and offshoring                     Yes, both are viable options if         C
                                                       language barriers can be bridged.
     I.   Changing vocational education                No                                      -
     J.   Designing and offering new courses           Yes, regarding sector specific e-       C, E, I
                                                       skills and soft skills training.
                                                       Flexible forms of training are
                                                       essential.
     K. Providing information about emerging skills    No, not necessary                       -
     L. Improve the image of the sector                No, not necessary                       -
     M. Stronger cooperation between stakeholders      No, not necessary                       -
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




                                                                                                         114
14.11 Metal and machinery workers

Table 14.8 presents the strategic options of this occupational function. The demand for metal
and machinery workers is expected to rise only in the optical products sub-sector. In all other
sub-sectors (electronic components and computers, communication equipment, and consumer
electronics) a decrease is likely. Hence, the strategic options should meet shortages and gaps
in skills, particularly in the optical products sub-sector.

For production workers technical knowledge is essential, next to social skills that become
increasingly important in all sectors for this occupational function. Due to a common set of
general technical skills, recruiting workers from other sectors with technical knowledge in
metal and machinery works is not a big challenge. Metal moulders or welders from other sub-
sectors and from other sectors can, for example, easily be recruited. In case of low hiring
costs and possibilities to bridge the language gap recruiting workers from other Member
States and non-Member States is another alternative. Job agencies can play an important role
here; human resource management tasks are increasingly been outsourced to these
intermediary organisations.

Technical knowledge is of key importance in this occupational function. Hence, training
courses enabling workers to use new machinery and new technology are required to keep
technical skills up-to-date. In addition, workers with excellent soft skills are increasing in
importance especially since product cycles are shortened in time. Thus, team work skills,
communication skills and the ability to react flexible should be integrated in new courses for
metal and machinery workers. Furthermore, knowledge about production related regulation
of hazardous or dangerous materials combined with know-how on the proper treatment (with
regular up-skilling of the workers) increases in importance. Another important emerging
competence is knowledge of quality control measures.

Due to differences in learning between target groups such as younger and older workers,
trainings need to be adapted to the specific demands of the target group. Recruiting young
people from the vocational training systems is an important strategic option to meet the
expanding skills needs in both scenarios of the optical products sub-sector. However, there is
a necessity observed to stimulate pupil’s interest in technical and science related subjects. For
this reason a solid co-operation of a certain set of stakeholders of the sector is essential. The
cooperation can serve as basis in order to meet the emergent skills needs also in the long run.




                                                                                             115
Table 14.8 Strategic options Metal and machinery workers
        1.   What is the maximum volume effect?          Maintain in electronics; increase in optical products
        2.   What is the maximum change in skills?       10
        3.   Do SMEs play a large role?                  Yes
        4.   Is the sector national/EU/global?           Global
        5.   Is the workforce old?                       Yes
        6.   Is the workforce low educated?18            No
 Option                                                  Is this option viable?                    Actors1
        A. Recruiting workers from other sectors         Yes, in order to meet general skills      C, E, I
                                                         needs of this occupational function.
                                                         Specific sector training needed.
        B. Recruiting workers from other Member          Yes, if language barrier can be           C, I
           States                                        bridged.
        C. Recruiting workers from Non-Member            Yes, if language barrier can be           C, I, G
           States                                        bridged.
        D. Recruiting unemployed with or without re-     Yes, together with sector specific        C, E, I
           training                                      training.
        E. Recruiting young people from the education    Yes                                       C, E
           system
        F.   Training and re-training employed workers   Yes, especially needed in respect to      C, E
                                                         emergent soft skills and up-to-date
                                                         technical knowledge.
        G. Changing work organisation                    No                                        -
        H. Outsourcing and offshoring                    Yes, it is viable for production          C
                                                         related functions if this fits into the
                                                         business model. It is not viable if
                                                         firm specialises in production.
        I.   Changing vocational education               No                                        -
        J.   Designing and offering new courses          Yes, in respect to soft and hard          C, E, I
                                                         skills. Flexible forms of training are
                                                         essential.
        K. Providing information about emerging skills   Yes, especially in the optical sector     C, E, I, U
        L. Improve the image of the sector               Yes, to meet the replacement              C, S, E, G, I,
                                                         demand.                                   U
        M. Stronger cooperation between stakeholders     Yes, in order to match skills supply      C, S, E, G, I,
                                                         and demand.                               U
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




18
     Independently from the ISCO classification the education level of metal and machinery workers differ from
     Member State to Member State: In the sector in the United Kingdom, for instance, primarily low skilled
     workers are employed whilst in Germany medium skilled workers are prevalent in the sector (compare ME-
     Analysen, 2003 and SEMTA, 2008: 96)


                                                                                                                116
14.12 Electric and electronic equipment mechanics and fitters

Table 14.9 presents strategic options for electric and electronic equipment mechanics and
fitters. The overall volume of this occupational function is expected to shrink in all sectors in
both scenarios. Thus, the strategic options primarily need to address those skills gaps which
were already identified for metal and machinery workers. In general, the strategic options are
the same, but they are not as pressing as for the metal and machinery workers due to an
expected decrease in this occupational function. Recruitment is increasingly being taken over
by job agencies and these intermediary organisations can play an important role in the
strategic options.

The main strategic choices are to train the existing workforce and recruit young people from
the education system. In the latter case the biggest challenge is expected for attracting young
people to the sector due to the poor image of the sector.

Technical knowledge is of key importance in this occupational function. Hence, training
courses enabling workers to use new machinery and new technology are required to keep
technical skills up-to-date. In addition, workers with excellent soft skills are increasing in
importance especially since product cycles are shortened in time. Thus, team work skills,
communication skills and the ability to react flexible should be integrated in new courses for
electric and electronic equipment mechanics workers.




                                                                                             117
Table 14.9 Strategic options Electric and electronic mechanics and fitters
     1.   What is the maximum volume effect?           Decrease
     2.   What is the maximum change in skills?        10
     3.   Do SMEs play a large role?                   Yes
     4.   Is the sector national/EU/global?            Global
     5.   Is the workforce old?                        Yes
     6.   Is the workforce low educated?               No
 Option                                                Is this option viable?                    Actors1
     A. Recruiting workers from other sectors          Yes, in order to meet general skills      C, E, I
                                                       needs of this occupational function.
                                                       Specific sector training needed.
     B. Recruiting workers from other Member           Yes, if language barrier can be           C, I
        States                                         bridged.
     C. Recruiting workers from Non-Member             Yes, if language barrier can be           C, I, G
        States                                         bridged.
     D. Recruiting unemployed with or without re-      Yes, together with sector specific        C, E, I
        training                                       training.
     E. Recruiting young people from the education     Yes                                       C, E
        system
     F.   Training and re-training employed workers    Yes, especially needed in respect to      C, E
                                                       emergent soft skills and up-to-date
                                                       technical knowledge.
     G. Changing work organisation                     No                                        -
     H. Outsourcing and offshoring                     Yes, it is viable for production          C
                                                       related functions if this fits into the
                                                       business model. It is not viable if
                                                       firm specialises in production.
     I.   Changing vocational education                No                                        -
     J.   Designing and offering new courses           Yes, in respect to soft and hard          C, E, I
                                                       skills. Flexible forms of training are
                                                       essential.
     K. Providing information about emerging skills    Yes, especially in the optical sector     C, E, I, U
     L. Improve the image of the sector                Yes, to meet the replacement              C, S, E, G, I
                                                       demand.
     M. Stronger cooperation between stakeholders      Yes, in order to match skills supply      C, S, E, G, I,
                                                       and demand.                               U
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




                                                                                                              118
14.13 Precision workers and repairers

Precision workers and repairers are an occupational subgroup of precision, handicraft, craft
printing and related trade workers. Precision makers are in general qualified technicians and
have a higher education level that precision repairers. The volume of this occupational
function is expected to rise in the optical products sector in both scenarios and remain stable
in the other sub-sectors.

The strategic choices to meet skills needs for this occupational function are like those of the
metal and machinery workers. However, since precision workers and repairers are primarily
working on specific machines recruiting from other sectors could be difficult due to a high
grade of specialisation, especially in the optical sector. Recruiting workers from other
Member States and non-Member States is also less probable due to language barriers.
Regular trainings on technical skills concerning the changing production processes are as
essential for precision workers and repairers as sustaining the high quality within the
production process.




                                                                                           119
Table 14.10 Strategic options Precision workers and repairers
     1.   What is the maximum volume effect?           Maintain, increase in optical products, especially in
                                                       the shift to nano and micro-manufacturing
     2.   What is the maximum change in skills?        11 (precision workers), 13 ( precision repairers)

     3.   Do SMEs play a large role?                   Yes
     4.   Is the sector national/EU/global?            Global
     5.   Is the workforce old?                        No
     6.   Is the workforce low educated?               No, middle educated
 Option                                                Is this option viable?                       Actors1
     A. Recruiting workers from other sectors          Yes from similar sectors (e.g.               C, E, I
                                                       mechanical precision workers), in
                                                       order to meet general skills needs of
                                                       this occupational function. Specific
                                                       sector training needed.
     B. Recruiting workers from other Member           Yes, if language barrier can be              C, I
        States                                         bridged.
     C. Recruiting workers from Non-Member             Yes, if language barrier can be              C, G, I
        States                                         bridged.
     D. Recruiting unemployed with or without re-      Yes, together with sector specific           C, E, I
        training                                       training and in-company training.
     E. Recruiting young people from the education     Yes                                          C, E
        system
     F.   Training and re-training employed workers    Yes for related professions,                 C, E
                                                       especially needed in respect to
                                                       emergent soft skills and up-to-date
                                                       technical knowledge.
     G. Changing work organisation                     No                                           -
     H. Outsourcing and offshoring                     Yes, it is only a viable option if it fits   C
                                                       into the business model. Depends on
                                                       whether the firm specialises in the
                                                       production.
     I.   Changing vocational education                Yes                                          C, E, G, S, I,
                                                                                                    U
     J.   Designing and offering new courses           Yes, in respect to soft and hard             C, E, I
                                                       skills. Flexible forms of training are
                                                       essential.
     K. Providing information about emerging skills    Yes, especially in the optical sector        C, E, I, U
     L. Improve the image of the sector                Yes, to meet the replacement                 C, S, E, G, I,
                                                       demand.                                      U
     M. Stronger cooperation between stakeholders      Yes, in order to match skills supply         C, S, E, G, I,
                                                       and demand.                                  U
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




                                                                                                                 120
14.14 Assemblers

The demand for assemblers is expected to increase in the High-end Customer Hi-Wi-Fi
scenario whilst the demand is expected to remain as it is in the Hi-Wi-Fi for Everyone
scenario. It is expected that assembling of standardised products will primarily be shifted
towards countries in Eastern and South Eastern Europe. However, assembling of niche and
high level products required in health care and optical industry will still be performed in
Central Europe.

Assemblers have to keep pace with the technological change and, in particular, with the rising
automation of production processes. Knowledge and hard skills required for this occupational
function are of technical nature for the most part. However, skills should be upgraded in
respect to new developments on an ongoing basis. For instance, updates on new materials are
essential in brazing and soldering due to changing regulations of hazardous materials (e.g.
lead). Skills upgrading is also crucial in respect to new equipments such as e.g. diagnostic
tools for quality control. Training and adapting the workforce to new hard skills will take
place ‘on the job’ to a great extent, performed by producers of technical equipment or
supervisors and the trainees/employee.

Strategic choices to overcome skills shortages as well as skills gaps for assemblers are,
firstly, recruiting workers from other sectors in cases where similar skills are required such as
accuracy. Other options include the recruitment from other Member States and non-Member
States (if hiring costs are low and language gaps can be bridged). The alternatives are to
recruit unemployed by offering respective training or train the existing workforce, especially
by strengthening the soft skills like multi-skilling and flexibility. Job agencies play a very
important role in recruiting assemblers, also in recruiting workers from other Member States
and from outside Europe. Human resource management tasks are increasingly outsourced to
job agencies. Changing work organisation can help to meet skills demands in assembly as
well. Work organisation can change because of mergers and acquisitions or because of
automation of production processes. Outsourcing is another option to meet skills demands,
which seems to have taken off recently.19

In order to attract more potential assemblers the visibility of the sector needs to increase.
Information on occupational profiles and emerging skills needs to be provided. Hence, a
stronger co-operation of relevant stakeholders is necessary.




19
   A special form of outsourcing is to use a chain of small subcontractors, more specifically home workers.
Although no specific data is available, recent evidence would indicate that in the UK and the Netherlands a
substantial part of the assembly process is done at home by home workers. Based on a question in the 1997 UK
Labour Force Survey, rough estimates indicate that in the UK between 1.2 and 2 million people could be
involved in assembling products at home and probably 15% is assembling electronic components. Home
assembling is mainly organised via long and complex chains of subcontractors (communication by Prof. U.
Huws at the Final Experts Workshop 20-21 November, Brussels).


                                                                                                       121
Table 14.11 Strategic options Assemblers
     1.   What is the maximum volume effect?             Maintain/increase in high-end products, especially in
                                                         optical and medical products sector and mainly in
                                                         NMS.
     2.   What is the maximum change in skills?          8
     3.   Do SMEs play a large role?                     Yes, for subcontractors and especially in EU-15
     4.   Is the sector national/EU/global?              Global
     5.   Is the workforce old?                          No, not in NMS, but older in EU-15
     6.   Is the workforce low educated?                 Yes, but higher educated in NMS (or over qualified
                                                         in combination with high unemployment rates) than
                                                         in EU-15
 Option                                                  Is this option viable?                   Actors1
    A. Recruiting workers from other sectors             Yes, together with sector specific       C, E, I
                                                         training.
     B. Recruiting workers from other Member             Yes, if it is not too cost-intense and   C, I
        States                                           if languages barrier can be bridged
     C. Recruiting workers from Non-Member               Yes, if it is not too cost-intense and   C, G, I
        States                                           if languages barrier can be bridged
     D. Recruiting unemployed with or without re-        Yes, together with sector specific       C, E, I
        training                                         training
     E. Recruiting young people from the education       Yes                                      C, E
        system
     F.   Training and re-training employed workers      Yes, especially regarding emergent       C, E,
                                                         soft skills
     G. Changing work organisation                       Yes, automation of low skilled jobs.     C
                                                         Many mergers & acquisitions in the
                                                         sector is also important as means for
                                                         recruitment
     H. Outsourcing and offshoring                       Yes                                      C
     I.   Changing vocational education                  No not necessary                         -
     J.   Designing and offering new courses             Yes, in respect to soft skills and       C, E, I
                                                         sector specific skills (especially
                                                         quality control). Flexible forms of
                                                         training are essential.
     K. Providing information about emerging skills      Yes, in order to match the skills        C, E, I, U
                                                         supply and demand.
     L. Improve the image of the sector                  Yes, in order to attract more            C, S, E, G, I,
                                                         assemblers (which are needed in          U
                                                         scenario Hi-Wi-Fi For All)
     M. Stronger cooperation between stakeholders        Yes                                      C, S, E, G, I,
                                                                                                  U
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




                                                                                                               122
14.15 Labourers and operators

Table 14.12 presents the strategic options for labourers. A strong decline is expected for this
job function in future. Generally, there will be a demand for up-skilling and (re)training
labourers to the level of production and repair as well as maintenance workers (or even
higher), to move to other positions in the organisation. Those labourers who are to stay need
to up-skill as well to be able to work together with other plant staff. In some cases as well as
in some countries (e.g. in Germany) financial support is provided for up-skilling workers
which are in danger of becoming unemployed. Governments as well as intermediate bodies
such as the public employment services play a key role in this respect and are important
partners in a solid cooperation of all stakeholders for this sector. Most labourers and
operators are hired via job agencies.

Table 14.12 Strategic options Labourers and operators
     1.   What is the maximum volume effect?           Decreasing
     2.   What is the maximum change in skills?        -
     3.   Do SMEs play a large role?                   No
     4.   Is the sector national/EU/global?
                                                       Global
     5.   Is the workforce old?
     6.   Is the workforce low educated?               Yes
                                                       Yes
 Option                                                Is this option viable?                   Actors1
     A. Recruiting workers from other sectors          No, not necessary                        -
     B. Recruiting workers from other Member           No, not necessary                        -
        States
     C. Recruiting workers from Non-Member             No, not necessary                        -
        States
     D. Recruiting unemployed with or without re-      No, not necessary                        -
        training
     E. Recruiting young people from the education     Yes, in order to meet the continuous     C
        system                                         replacement demand
     F.   Training and re-training employed workers    Yes, in order to adapt to emergent       C, E, I
                                                       skills needs of the existing workforce
                                                       and to up-skill the workforce in
                                                       order to meet the demand of
                                                       emerging occupations.
     G. Changing work organisation                     No, not necessary
     H. Outsourcing and offshoring                     No, not necessary
     I.   Changing vocational education                No, not necessary
     J.   Designing and offering new courses           No, not necessary
     K. Providing information about emerging skills    No, not necessary
     L. Improve the image of the sector                No, not necessary
     M. Stronger cooperation between stakeholders      No, not necessary
 Notes: 1. C (company), S (sector organisations and chambers of commerce), E (education & training),
 G (governments and regulators), I (intermediary organisation, public or private), U (trade unions).




                                                                                                          123
14.16 Scenario implications, future skills and knowledge needs and possible
      solutions: summary and main conclusions

Implications of the scenarios in terms of expected volume changes in employment (jobs),
future skills and knowledge needs as well as ways to address and solve these needs (strategic
choices) have all been analysed so far for individual job functions. This section summarises
the main implications and solutions for each of the functions presented in Chapters 12-14. It
serves as a bridge to the next chapter where we shift from a micro perspective (job functions)
to a meso (sector and policy) perspective.

                                                            High-end Customer Hi-Wi-Fi   Hi-Wi-Fi For Everyone
                         1. Employment volume change                   +, +*                           0, 0/+
                         2. Skills changes counted 1); 2)                            18
                                                Entrepreneurship, Strategic& visionary skills, Change management, Self
                         3. Emerging skills needs
                                                    management, Social skills (communication, networking, language,
                                                  intercultural skills), Knowledge (e-skills, supply chain management,
Managers




                                                                    Intellectual Property Management)
              4. Most important solutions       Recruiting, Training and re-training, Designing & offering new courses,
                                                    Providing information, Stronger cooperation between stakeholders
              5. Most important actors                                           C, G, E, U
              1. Employment volume change                        +, +                                  0/+, +
              2. Skills changes counted                                              15
IT system developers




              3. Emerging skills needs             Knowledge (Imaging, System integration, Modelling & simulation,
                                                Programmes Languages), Problem solving skills (analytical skills, multi-
                                                                                  skilling)
              4. Most important solutions          Recruiting from other Member States, from non Member States and
                                                 young people, Training and retraining, Changing vocational education,
                                                 Designing and offering new courses, Providing information, Improving
                                                            image, Stronger cooperation between stakeholders
              5. Most important actors                                         C, G, E, I, S U
              1. Employment volume change                        0, 0                                   0, 0
              2. Skills changes counted                                              13
IT system appliers and




              3. Emerging skills needs           Problem solving skills (especially analytical skills and multi-skilling),
                                                  Self management (especially stress & time management), Knowledge
                                                       (especially B2B IT platforms), Social skills (team working,
                                                                              communication)
              4. Most important solutions       Recruiting from other sectors, other Member States, non Member States,
supporters




                                               young people and unemployed, Training and retraining, Outsourcing and
                                                offshoring, Changing vocational education, Designing and offering new
                                                courses, Providing information, Improving image, Stronger cooperation
              5. Most important actors                                         C, G, E, I, S, U
              1. Employment volume change                        0/+                                    0, 0
              2. Skills changes counted                                              14
              3. Emerging skills needs              Problem solving skills, Self management (planning, stress & time
                                                  management, flexibility), Knowledge (technical and e-skills), Process
Production engineers




                                                    optimising, Quality management, Social skills (team working and
                                                                              communication)
              4. Most important solutions       Recruiting from other sectors, other Member States, non Member States,
                                                   unemployed, Training and retraining, Changing work organisation,
                                                 Outsourcing and offshoring, Changing vocational education, Designing
                                                   and offering new courses, Providing information, Improving image,
                                                                Stronger cooperation between stakeholders
              5. Most important actors                                         C, E, G, I S, U
C=Companies; S=Sectoral organisations, U=trade Unions; E=Education and training institutes; G=Government (EU,
Member State, regional, local). Notes: 1) The term ‘skills’ includes knowledge (needs). 2) The 2nd row ‘skills changes
counted’ refers to the number of skills categories in the most extreme scenario. *) Assessment of volume changes for
electronic components, computers, communication equipment and consumer electronics on the one hand and for the optical
and medical products on the other hand.




                                                                                                                     124
                                                         High-end Customer Hi-Wi-Fi                   Hi-Wi-Fi For Everyone
                           1. Employment volume change                   +, +                                   0/+, +
                           2. Skills changes counted                                          20
                           3. Emerging skills needs         Knowledge (technical, product development, system integration),
                                                            Problem solving skills, Self management (planning, stress & time
                                                         management, flexibility), Social skills (team working, communication,
                                                         networking), Entrepreneurship (especially understanding customers and
                                                          suppliers), Project management, Process optimising, Trendsetting and
                                                                       spotting skills, Strategic and visionary skills
R&D engineers




                           4. Most important solutions   Recruiting from other sectors, other Member States, non Member States
                                                         and unemployed, Training and retraining, Changing work organisation,
                                                         Outsourcing and offshoring, Changing vocational education, Designing
                                                           and offering new courses, Providing information, Improving image,
                                                                        Stronger cooperation between stakeholders
                           5. Most important actors                                    C, E, G, I S, U
                           1. Employment volume change                   0/+                                     0, 0
                           2. Skills changes counted                                          10
Accounting and




                           3. Emerging skills needs       Knowledge (legislative and regulatory, e-skills), Analytical skills, Self
                                                           Management (stress & time management, flexibility, multi-tasking),
                                                           Social skills (team working, language, intercultural skills), Process
Finance




                                                                                         optimising
                           4. Most important solutions       Recruiting, Training and retraining, Outsourcing & offshoring
                           5. Most important actors                                       C, E, G, I
                           1. Employment volume change                   +, +                                    0, 0
                           2. Skills changes counted                                          20
                           3. Emerging skills needs           Entrepreneurship, Client relationship management, Social skills
   Sales and Marketing




                                                            (especially intercultural), Self management, Knowledge (product),
                                                         Problem solving skills (interdisciplinary, creativity), Project management
                           4. Most important solutions       Recruiting, Training and retraining, Changing work organisation,
                                                             Outsourcing and offshoring, Designing and offering new courses,
                                                            Providing information, Stronger cooperation between stakeholders
                           5. Most important actors                                   C, E, G, I, U, S
                           1. Employment volume change                   +, +                                 0/+, 0/+
                           2. Skills changes counted                                         10
   Supply chain managers




                           3. Emerging skills needs      Social skills (networking, language, intercultural), Knowledge, Analytical
                                                             skills, Self management (stress and time management, flexibility)
                           4. Most important solutions      Recruiting, Training and retraining, Changing work organisation,
                                                          Outsourcing and offshoring, Changing vocational education, Designing
                                                          and offering new courses, Providing information, Stronger cooperation
                                                                                  between stakeholders
                           5. Most important actors                                  C, E, G, I, S, U
                           1. Employment volume change                   -, -                                    -, -
                           2. Skills changes counted                                         9
                           3. Emerging skills needs        Self management (especially flexibility and multi-tasking), Initiative,
                                                           Social skills (team working, communication, language, intercultural),
   Support staff




                                                                                    Knowledge (e-skills)
                           4. Most important solutions       Recruiting, Training and retraining, Outsourcing and offshoring,
                                                                             Designing and offering new courses
                           5. Most important actors                                      C, E, I, G




                                                                                                                                 125
                                                        High-end Customer Hi-Wi-Fi                Hi-Wi-Fi For Everyone
                          1. Employment volume change                 0, 0/+                                 -, 0/+
                          2. Skills changes counted                                        10
                          3. Emerging skills needs
Metal and machinery




                                                        Knowledge (especially technical and quality control), Social skills (team
                                                         working and communication), Problem solving skills (initiative, multi-
                                                                                 skilling), Flexibility
                          4. Most important solutions      Recruiting, Training and retraining, Outsourcing and offshoring,
workers




                                                        Designing and offering new courses, Providing information, Improving
                                                                 image, Stronger cooperation between stakeholders
                          5. Most important actors                                  C, E, I, G, U, S
                          1. Employment volume change                   -, -                                   -, -
equipment mechanics and




                          2. Skills changes counted                                       10
Electric and Electronic




                          3. Emerging skills needs        Knowledge (especially technical), Social skills (team working and
                                                          communication), Problem solving skills (initiative, multi-skilling),
                                                                                      Flexibility
                          4. Most important solutions      Recruiting, Training and retraining, Outsourcing and offshoring,
                                                        Designing and offering new courses, Providing information, Improving
fitters




                                                                 image, Stronger cooperation between stakeholders
                          5. Most important actors                                  C, E, I, G, S, U
                          1. Employment volume change                  0, +                                   0, +
                          2. Skills changes counted                  11 (precision makers), 13 (precision repairers)
                          3. Emerging skills needs      Knowledge (technical , product, quality control), Problem solving skills
Precision workers and




                                                          (especially analytical), Social skills (team working, communication,
                                                                          language, intercultural), Flexibility)
                          4. Most important solutions       Recruiting, Training and retraining, Outsourcing and offshoring,
                                                         Changing vocational education, Designing and offering new courses,
repairers




                                                        Providing information, Improving image, Stronger cooperation between
                                                                                       stakeholders
                          5. Most important actors                                  C, E, I, G, S, U
                          1. Employment volume change                 0/+, +                                  -, 0
                          2. Skills changes counted                                        11
                          3. Emerging skills needs       Knowledge (technical, product, e-skills), Social skills (team working,
                                                          communication, language), Problem solving skills (initiative, multi-
                                                          skilling), Self management (stress & time management, flexibility)
                          4. Most important solutions      Recruiting, Training and retraining, Changing work organisation,
Assemblers




                                                           Outsourcing and offshoring, Designing and offering new courses,
                                                        Providing information, Improving image, Stronger cooperation between
                                                                                     stakeholders
                          5. Most important actors                                  C, E, I, G, S, U
                          1. Employment volume change                   -, -                                   -, -
                          2. Skills changes counted                    5                                      5
                          3. Emerging skills needs        Knowledge (e-skills, technical         Knowledge (e-skills, technical
Labourers and operators




                                                         knowledge, quality control), self      knowledge, quality control), self
                                                           management (stress & time              management (stress & time
                                                            management, flexibility                management, flexibility
                          4. Most important solutions   Recruiting young people from the       Recruiting young people from the
                                                         education system (replacement          education system (replacement
                                                        demand); Training and retraining       demand); Training and retraining
                                                                  (up-skilling)                          (up-skilling)
                          5. Most important actors                   C, E, I                                C, E, I




                                                                                                                              126
15 Conclusions and recommendations for education and training

15.1 Introduction

This chapter presents the main conclusions and recommendations for education and training;
chapter 16 presents the main other conclusions and recommendations. Whereas the earlier
chapters very much take a micro perspective by focusing on job functions in terms of
expected volume changes, skills and knowledge needs and ways to address and solve these
needs (strategic choices), chapter 15 takes a meso or sector perspective. It addresses a number
of issues, part of which coming already to the fore in earlier chapters, and part being ‘new’
issues although much related to those already raised. The conclusions and recommendations
are mostly based on the results of the preceding chapters; they were discussed during the final
workshop with social partners, the industry and other experts.

The recommendations contained in this chapter should not be seen as fully exhaustive. They
rather form the basis for further discussion and elaboration at various decision-making levels,
ranging from the European Union and the Member State to the regional and local level.
Industry itself – firms – have an important role to play, as do education and training institutes,
social partners and the government (EU, national, regional and local). In most cases action
should be taken jointly, by involving various actors, sometimes even at different levels.
Collaboration and co-operation as buzzwords in today’s economy are easily coined. Making
collaboration work in practice is, however, a challenge which requires mutual understanding,
compromise and perseverance.

15.2 Conclusions and recommendations for education and training

1) Adapt and modernise vocational education and training (VET) and general
     education systems, but do this nationally rather than at the EU level
The rapid technological change and the pervasive globalisation of the supply chain have a
strong impact on occupational functions as well as on the skills and knowledge needs in these
functions. As the previous chapters highlight, the impact is strongest for high educated job
functions. Nonetheless, similar conclusions might also be drawn for medium-skilled workers.
Technological change and globalisation have led to adjustments in the organisation and
production resulting in changes in the skills compositions (Bonser et al., 2006: 23) and will
continue to do so. The ‘half-life’ of skills is getting shorter especially in the technological and
software programming occupations. According to SEMTA technological development is the
most important driver of emergent skills needs (SEMTA, 2008: 92). In the electronics
industry technological changes happen so rapidly that disconnecting between the “long-term”
education cycle and production development is a serious concern (EIGT, 2004: 147).
Additionally, the globalisation of the production chain has led to stronger specialisation, also
in European firms. This makes that even more specialist technical skills are demanded by the
sector for all occupational levels (ME-Analysen, 2003: 13). This obviously creates a tension
between the demand for practical, sector specific, fast changing skills on the one hand, and
the need to train pupils with the more basic occupational skills on the other. Possible options
to overcome this dichotomy are 1) to enhance the flexibility of the vocational educational
training (VET) system by a stronger modularisation (see next point 2), 2) closer co-operation
of the stakeholders to work on these options (see next point 4), and 3) better monitoring of
research and development expenditure in firms, and more broadly, skills and knowledge
training needs in firms as to respond more aptly to arising skills and knowledge needs (see
next chapter).


                                                                                               127
Box 6. Vocational education and training– rich variety between Member States
A number of different systems in Vocational Education and Training (VET) as well as Initial and
Continuing Vocational Education and Training (IVET and CVET) can be observed throughout the
European Union. Various characteristics of these systems have to be taken into consideration when
discussing possible specific implications for education and training. Existing VET-systems can be
grouped into three main categories (‘idealtypes’), (i) liberal, (ii) state-controlled and (iii) corporatist
VET-systems, each having a different underlying rationale and distinguishing characteristics. Key in
this distinction are those who decide about the structure and content of VET: business itself, the state
or the state together with social partners (see Table below). The three VET-systems of Germany,
France and the United Kingdom are of special importance as they can be taken as representative for
each of the three ‘idealtype’ categorisations. They are evidence of the rich variations in existing VET
systems and their implementation in Europe. The enterprise-based training system of Germany (the
‘Dual System’) is implemented by the social partners and the state. Next to this prevailing system
other forms of VET exist. In France, a school-based training system is established and implemented
by the state. Even though the full-time school-based training system competes to some extent with an
upcoming apprenticeship training system, it is still the dominant form of vocational training in France.
The system implemented in the UK, the national vocational qualification, is regulated and driven by
market forces in several important segments. Although national vocational qualifications (NVQ) and
general national vocational qualifications (GNVQ) are regulated at national level, the implementation
of training is not yet regulated at national level. Commercial certification systems are still competing
with national ones. Work-based, as well as full-time school-based training can be found. Special
training schemes for unemployed, such as school-based schemes for unemployed youths or work
social enterprises for long-term unemployed, are present in several European Member States. Besides
these ‘idealtypes’ several mixed forms in Europe exist. In Spain, for example, one finds more
informal forms of VET and in Central and East European countries the trend can be detected, that
VET moves from a state centred model to a stronger corporatist model, while also business driven
approaches exist in some sectors.

 Table to Box 6. Three ‘ideal-type’ VET-models (elaborated from Clematide, 2005)
                    A. Liberal                       B. State-controlled           C. Corporatist
 Decision maker     Business (and individuals)       State                         State and social partner
                                                                                   organisations
 Rationale          Liberalistic competitive         Centralistic state-centred    Corporative – social
                                                                                   consensus
 Programmes         Business and individual          Education and citizen         Occupation
 Content            Needs of business and            Politically determined,       Determined by social
                    individual, utility oriented,    general knowledge,            partners, occupation
                    short term and specific          course-oriented, academic     centred, traditions
 Labour markets     Internal (business) labour       Occupational and internal     Occupational labour
 VET relates to     markets                          labour markets                markets
 Strengths          Flexible, cheap for the state,   Strong linkage to the         Broad vocational
                    close to the needs of            education system, no lack     educations with status
                    production                       of training places            equal to general education
 Weaknesses         Under-investment in training     Weak linkage to the labour    Inertia in the institutions
                    and education                    market
 Representatives    United Kingdom, Ireland          France                        Germany, Austria,
                                                                                   Denmark
 Trends             Stronger state involvement       “Dual system” emerging        Internal labour markets
                    in certification and quality     and stronger orientation on   Marketing of VET
                                                     business needs



                                                                                                              128
These options imply several changes for the prevalent European initial vocational educational
training systems (IVET) and VET systems (see Box 6). As VET systems in terms of strengths
and weaknesses differ between Member States, and sector-specific challenges and hence
employer needs do too, the necessary changes clearly differ from Member State to Member
State.

2) Enhance the flexibility in education and training by promoting modularisation
Enhanced flexibility in education and training of especially technical occupations is needed.
Flexibility in our sense refers to the capability of the VET System to adapt effectively to new
training needs, both in quality and in quantity. A flexible VET-System is required in
particular in circumstances in which profound changes take place and job functions and
occupational profiles are modified quickly. In order to achieve more flexibility and to
respond in-time with altering training contents and enhanced quantity a modularisation of
education and training is recommended. Even if problems will occur in the modularisation of
training in some IVET-Systems modular systems facilitate the building up of competences
and ease the interaction between IVET and CVET Systems. Flexibility is also required for
different forms of education and training. Enhanced flexibility and a modularisation of IVET
is a big challenge for the state controlled and the corporatist systems. Liberal system will find
their ways easier. However, the liberal market driven systems with their strong focus on
technical on-the-job skills lack behind in general education which becomes an obstacle for
up-skilling of the individual and a higher permeability of the education system. Besides, basic
and generic skills are not obsolete but become more important as a basis for the ability to
react on new training demands emerging from new technologies and changing production
processes.

3) Stimulate targeted facilitation of Life-Long Learning (LLL)
Lifelong learning is essential to keep competitiveness and prevent less favourable scenarios.
Sector organisations and trade unions together with public authorities and other relevant
stakeholders such as training organisations and universities should develop joint programmes
of lifelong learning in order to up-grade skills of the workforce in the sector. The
programmes should be tailored to the specific needs of the SMEs in the sector. Governments
should further develop the legal framework for supporting life long learning at all ages. Life
long learning should encompass all skills levels aiming at raising social skills as well as
technical sector skills. All possible international, national as well as to some extent also
regional and local pathways should be used in order to finance lifelong learning. Employees
should be made aware of the Life-Long Learning concept and their employability. Life-Long
Learning should get into the mindset of individuals and they should become motivated in
organising their own working career. Also older populations should be targeted, as they are
very experienced and this experience and expertise should be kept in the sector. Specific
attention is needed to e-skills. E-skills are very important for all job functions in the sector.

4) Strengthen collaboration between vocational training institutes and industry
VET systems are well-placed to play an important role in accommodating and supporting
modular training and life-long learning needs of firms, employers and employees. This
requires, however, important adaptations to prevailing VET systems. Currently, the
corporatist and school based VET systems guarantee a universal initial vocational training
and in the case of combined apprenticeships also a practical training on the job (dual system).
However, the possibility of continuing training is mostly disregarded. The once applied
qualification leads to a reposition on the achieved, with life-long learning being perceived as
not necessary. Current VET structures are not able to quickly adapt to the new skills and



                                                                                             129
knowledge needs. What is needed is a solid co-operation between VET training institutes and
industry (companies) in order to better match existing training packages to the skills and
knowledge needs of the industry and to jointly think and design a modularised training
structure that is flexible enough to accommodate to the needs of firms and workers
throughout the working life cycle.

5) Strengthen knowledge networks in higher education
Internationally networked research and education institutes are key to improving training
and education, just as close informative ties with the industry. What applies for the IVET and
VET system applies also to the higher education system in engineering and technical studies
more broadly. Technological change is enfolding rapidly. Due to longer education cycles,
skills can outdate even faster (EIGT, 2004: 147). Furthermore, practice and specific sector
skills are requested by employers. Universities and colleges cannot solve the problem on their
own: Support from sector organisations and companies is needed. If companies demand
sector specific knowledge from students (EIGT, 2003; ME-Analysen, 2003), one way to
address this is to offer more in-company placement programmes for students and graduates.
Additionally, universities of cooperative education (“Berufsakademien”) could be set up in
the sector. For example, the German company “Analytic Jena”, operating in the optical
sector, is offering places for a university of cooperative education to close the gap between
specific and general skills in biotechnology for bio-analytic instruments. One important
advantage of such cooperative education is that universities are kept updated on the skills
demands of the industry. Another option is to promote the establishment of alumni networks
in the respective disciplines such as mathematics, physics and engineering. Alumni can serve
as role models for students by bringing in their practical know-how in lectures. While co-
operation between large companies and universities already exists to some extent, SMEs are
mostly not included. A joint training system especially for SMEs in regions with a high
density of sector companies is an important measure to overcome some of the difficulties
faced by SMEs such as the lack of resources.

6) Build on existing know-how transfer and establish learning networks alongside the
    value chain
Evidence shows that firms within the value chain can be important external suppliers of
know-how transfer. This is, for example, what is observed for SMEs in the optical sector
(VDI, 2004: 85). This potential could be exploited in a more structural and sustainable way
by organising regional learning networks along side the value chain. Such networks could be
tied to already existing cluster initiatives in the sector. VET suppliers can develop, organise
and support such kind of networks for a sustainable know-how transfer. Training providers of
the sector or intermediate organisation can investigate the main skills needs by interviewing
companies in a structured way and organise training. This approach is confirmed in the same
study by the finding that optical technology competence networks are of relative importance
for gaining latest practical knowledge.

7) Enhance flexibility in learning forms – e-learning and blended learning
Flexibility is not only needed in the adaptation of the VET system, but also in the learning
forms provided. For example, blended learning combining face-to-face and group-based
learning with up-to-date offline media and online e-learning forms, as for example digital
learning modules on websites, video conferences, joint learning applications, newsgroups and
blogs for interactive online learning. Therewith, costs of further training are reduced and the
flexibility to combine work with training is enhanced. Another positive side-effect on skills




                                                                                           130
of this learning form is the needed competences like self reflection, self motivation, and
effectiveness of information processing.

8) Foster a culture of learning, innovation, openness and tolerance
Fostering a culture of learning and innovation – not only for the young in school, but
throughout life - is a vital element in maintaining and further upgrading Europe’s skills base.
Fostering such a culture not only requires that schools consistently address the importance of
learning to their pupils but also that the importance of life-long learning, of ‘éducation
permanente’ is better incorporated in the mindsets and actual behaviour of people than is now
the case. The media, government and social partners all have their role to play in this
challenge. Openness and tolerance are a conditio sine qua non in establishing a culture of
learning and innovation.

9) Strengthen basic skills early on and improve the quality of primary education
The reported lack of basic skills of technicians (machine workers, electrical workers,
precision handcrafts) in mathematics and natural sciences (see, e.g., ILO, 2007: 89; EIGT,
2004: 142; EECA/ESIA, 2005: 35) and the poor image of respective courses, together with
the high number of (especially female) pupils reluctant to go into technical and engineering
occupations, make interventions at an early stage necessary (see also point 10 on image and
attractivess). To overcome skills shortages and gaps until 2020, actions should be taken for
the primary education system. Natural science and mathematics needs to be boosted and
enriched in school curricula in order to strengthen basic skills. Moreover, the quality of
primary education, in general, has to be improved. The responsibility for designing education
curricula lies with authorities. However, even if curricula are adjusted, additional measures
have to be taken in order to redirect large numbers of potential personnel to technical
occupations. Hence, the industry itself has to set activities which go beyond supplying
infrastructure.

In the United Kingdom, STEMNET20 (Science, Technology, Mathematics Network) aims to
increase the number of science, technology, engineering and mathematics related careers at
all levels. The network actively brings natural science into schools and into curricula via a
twofold way:

       •   Bringing science, technology, engineering and mathematics activities, experiences
           and excitement into classrooms throughout the UK, enhancing and enriching the
           national STEM curriculum.
       •   Linking those companies and other organisations that employ STEM educated people,
           and schools, in such a way that young people can get a clear idea of the diverse and
           exciting range of careers available to them.
The objectives are achieved through science engineers ambassadors (SEA) from companies,
some of which are from the electronics and optical sector. The SEAs provide assistance to
schools in terms of STEM related competitions, events, wards, clubs, mentoring, career
guidance, work based placements. The SEAs act as role models for young learners.
STEMNET also provides support for teachers via curriculum enhancement and enrichment.
Partners of the network are companies and their representatives as well as schools. The
network is supported by national funds.



20
     http://www.stemnet.org.uk/ (October 2008).


                                                                                               131
10) Promote the natural sciences and mathematics in schools and improve the image
    and visibility of technical and scientific job careers
In several European countries initiatives to improve the image of mathematics, physics and
chemistry and to raise interest in science at early age are underway. The electronics and
particularly the optical sector should actively be brought to school in order to reach young
people with possible affinity to working in electronics. Not only primary schools have to be
involved but also vocational education and universities (workshops, apprenticeships etc.).
Focused provision should address not only students from technical universities, but also
students from managerial/business, sales and marketing and accounting studies. Initiatives of
this kind should be elaborated, expanded, and disseminated across Europe. New ways of
learning combining basic education and scientific knowledge are required to enable the
workforce in IT sectors to better understand and manage challenges brought forward by their
technologies in the emergent knowledge-based economy of the information society. Europe
could take countries like Korea and Taiwan as an example, where natural sciences and
mathematics is part of daily life and culture and almost every student has at least a basic
knowledge in these science fields. Mass media could help to bring science into daily life and
culture. One of the recommendations by the Electra initiative21 is that in all EU countries at
least 25% of tertiary education students should be in technical, engineering and science
education (Electra, 2008).

When discussing a lack of basic skills in mathematics and natural sciences as well as a
negative image of technical and scientific professions, it is important to keep in mind the
differences between the EU-15 and the new Member States. In the new Member States
relatively more people are trained in mathematics and natural sciences than in EU-15, and the
share of women with these skills is also larger. The image of the sector is in general also
better in the new Member States than in EU-15. The computer, electronic and optical
products industry is considered as a relatively stable and modern industry, which is attractive
to work for.

11) Supply special courses dedicated to sector characteristics: supply change
     management, design engineering, nano-electronics and nano-optics
For some job functions special courses are needed. It is necessary to strike a balance between
what is offered in the educational system and what is needed in the sector. Based on the
scenarios and the literature review training needs are observed in the technical occupations
such as engineering and mechanics as well as for business professionals (SCM - supply chain
management). In the computer, electronic and optical products sector a great need for design
engineers was identified. According to the study undertaken by the National Training
Organisation for Engineering Manufacture (EMTA, 2001: 13) a profound understanding of
design packages as well as of computer science, a good grounding in electronics with a
reflective knowledge in mathematics and physics and subsector-specific knowledge (e.g. in
circuit design or magnetic design) as well as project management is necessary. Similarly,
nano-electronics is a field that is still developing posing future skill needs (Abicht et al.,
2006). This also applies to the optical products sub-sector (nano-optics), optical measuring
technology and optical information as well as communication technology. Another emerging

21
   Electra is a joint initiative by the EU’s electrical and electronic engineering industry and the European
Commission. It aims at addressing the EU's policy objectives on climate change, the creation of a strong,
innovative electrical and electronic engineering industry in Europe as well as more and better jobs. Electra is a
joint initiative by the EU’s electrical and electronic engineering industry and the European Commission. It aims
at addressing the EU's policy objectives on climate change, the creation of a strong, innovative electrical and
electronic engineering industry in Europe as well as more and better jobs.


                                                                                                            132
field with specific training needs is optical instruments in medicine and biotechnology (VDI,
2004: 76).

12) Supply special courses for older workers
The workforce in several occupational functions is ageing. Education and training institutions
need to adjust their training programmes to the needs of an ageing population and workforce
and develop specific courses. Older workers learn differently than younger workers (e.g.,
older learners often face challenges in theory-based, upfront teaching, which is only focused
on examinations but better can exploit practical experience). The design of training,
therefore, has to meet the demands of each specific target group (ZVEI, 2003).

13) Pay more attention to interdisciplinary and multidisciplinary studies
In vocational education and training more attention should be paid to inter- and
multidisciplinary studies as different technical skills need to be combined with non-technical
skill requirements. Although sound technical education still provides the basis, attention
should also be paid to enhance other skills such as project management, languages and
competencies in business development. Such elements should be an integral part of
apprenticeship and traineeship programs.

14) Foster multi-skilling
As indicated by the scenarios, multi-skilling will become more important in the future
improving the operating flexibility of firms. Multi-skilling – training employees to master
different skills in order to fulfil a range of tasks – applies across job functions, but is
especially relevant in the medium skilled job segment. To pursue multi-skilling and be able to
offer applicable courses for the industry, not only co-operation between the training sector
and companies is needed but also between different training providers. In several countries,
stable co-operations between the industry and universities, colleges and other private training
providers do already exist; these could be enhanced and further strengthened in order to
provide combined and interlinked training modules for the sector.



16     Main other conclusions and recommendations

16.1 Introduction

This report concludes with a number of ‘other’ (i.e. going beyond education and training)
conclusions and recommendations based on the results and insights gained during the course
of this study. They include the results of an intensive two day workshop with various
stakeholders and the European Commission during which the draft final results, including
preliminary recommendations, were discussed. The conclusions and recommendations apply
to the sector at large (including individual firms, sector organisations, chambers of
commerce, social partners), intermediary organisations, education and training institutes, as
well as policy-makers (EU, Member States, regions).

The recommendations point into viable and useful directions rather than that they represent
ready-made proposals for change. Reflection and debate, and finding creative answers to
plausible futures in skills and jobs is, in the absence of a crystal ball, the way forward. The
bandwidth between the expected developments in the most extreme scenarios is indicative for
the degree of uncertainty by which the future should be approached. Solutions to future skills


                                                                                           133
needs should therefore be flexible, smart and encompassing enough to address the differences
between the various scenario outcomes, not knowing what real future will eventually emerge.

16.2 Main other recommendations

1) Foster collaboration between all stakeholders and between different geographical-
political levels and stimulate Partnerships for Innovation and Job creation and Social
Dialogue
The first recommendation to meet existing and emergent skills and knowledge needs for the
electronic, computer and optical products sector is to support intensified co-operation
between all relevant stakeholders in the sector. The challenge to overcome sectoral skill gaps
and shortages can be met if industry, research, training providers, social partners and public
authorities act in concert. Employers’ organisations and trade unions in most countries are
capable, in co-operation with training providers and educational institutes, to commonly and
better address future skills and knowledge needs, and also set up funds for the training of
employees. In order to make colloboration work, more interaction between the European,
national and regional level is essential.

Enhanced investment in human capital is required. Cost sharing mechanisms between actors
such as public authorities, companies and individuals need to be developed and learning
throughout the life cycle promoted (LLL): learning must be made more attractive to all, e.g.
via tax incentives, a change of attitudes in order to integrate learning into all phases of live
and a lifecycle approach to work.

Collaboration is required to meet the skills and knowledge needs and support the
development of sectoral learning strategies, but also to foster sustainable development,
exchange best practices and promote R&D innovation, for instance by building on existing
and establishing new partnerships for innovation and job creation. Establishing a broad
Social Dialogue, both at Member State and European level, can serve to further discuss
priorities and feasible actions. The already existing Social Dialogue Sectoral Committees also
have an important role in proactively disseminating the importance of addressing future skills
and knowledge needs.

2) Develop and cherish successful regional clusters
Developing and maintaining successful regional clusters is one of the challenges ahead. The
presence of a world class scientific institute or technical university is a conditio sine qua non
for such a cluster to arise. A dominant role of a large company may help to develop a
successful regional cluster. What is also vital is a well-developed form of intermediation
between large companies and SMEs, for instance along the idea of open innovation. Support
in research/strategy development, public co-financing of VET (costs sharing) and flexibility
of the education system, the ability to attract talent (e.g. by high-quality labour market
intermediaries), a culture of innovation and trust, as well as excellent working and living
(quality of life) conditions are all important, but are alone not decisive factors in developing
successful regional clusters. Chances of copying – and the copy-ability of cluster concepts
and ideas generally – are low, because of regional and sectoral specificities, amongst others.
Good examples are manifold; prime locations such as Bangalore have their downsides, with
very high job turnover and attrition rates (with many workers less than a year in one job) and
hig general volatility. Secondary locations, like the example of Ericsson in Sri Lanka may be
more promising.




                                                                                             134
3) Diversify the personnel base and recruitment scope
A key recommendation is to aim at diversifying personnel in all job functions. This goal is to
be met through a broadening of the sector’s recruitment scope in that female workers as well
as minorities and other groups of potential workers will be better reached and facilitated. The
computer, electronic and optical products industry in 2009 still is extremely male dominated.
Personnel diversification, firstly, does make the sector more appealing to other groups. Since
the sector is lacking competences, personnel diversification, secondly, can help to overcome
the foreseen skills shortage in engineering. Personnel diversification would also enable
companies to better develop business in new markets (new client groups or countries).
Recruiting workers from different cultures assists in building up social skills (e.g.
intercultural as well as language skills) which are needed in almost all job functions as stated
in both most plausible scenarios.

4) Increase flexibility in the work organisation
Flexibility in the work organisation allows for training during less intense production times
and intense working during production peaks. In the EU flexibility in work organisation
predominantly lies with the social partners that make (company) specific agreements. Since
flexibility in work organisation is still low in the sector, different schemes should be
developed and implemented.

5) Increase intra- and intersectoral as well as transnational mobility and promote
international and intersectoral acknowledgement of certificates
For some job functions mobility – national (between sectors, regions) and international - is an
important option to meet future skills needs. To increase the viability of this option
improving the acknowledgement of certificates between sectors and countries is essential,
with adequate accreditation provisions. Improving acknowledgement applies also to in-house
trainings, as several trainings are not yet certified. One of the reasons why mobility of the
workforce is sub-optimal and matching of skills demand and supply is difficult is a lack of
transparency of skills. Educational and training institutes which provide widely accepted
certificates could considerably increase their value added for students. However, they often
rely on governments to build effective acknowledgement systems. Certification of vocational
training in the sector could be expanded. Due to the fact that external training providers are
neither providing necessary cutting-edge skills nor are flexible enough to update rapidly
evolving requirements of the sector, training was and still is mainly organised in-house by
own staff (ILO, 2007: 89). Certification in the sector started with the individual need of IT
companies to validate their own staff. For this reason it developed their own qualification and
certification system (ILO, 2007: 89; European Commission, 2004a). The training is
undertaken in the company, but testing and certification is undertaken by other certification
companies. With the computing technology association (CompTIA) vendor neutral
certificates are established and tertiary education has taken up this kind of certificates to some
extend. The certificates have a date of expiry. Due to the fact that this system lies outside the
educational system it is neither monitored nor broadly evaluated, but the certificates are
accepted by the companies and comprise programming and technical skills. There are several
national and European initiatives to develop independent certification systems as well as
embedding the certifications into national qualifications frameworks (European Commission,
2004a).




                                                                                              135
6) Promote the intra-sectoral, intersectoral and transnational acknowledgement of IT
skills by introducing an IT driver’s licence
To promote IT-skills or e-skills and their acknowledgement throughout the EU, by
establishing an “IT driver’s licence” (for instance modelled after the example set by Finland),
would be an important step. The European E-Skills Forum also points at the necessity to
converge the various European initiatives into one European e-skills framework to increase
transparency and comparability of e-skills, in order to enhance the e-skilled workforce and to
increase workforce mobility across Europe (European Commission, 2004a).

7) Provide better career guidance for those in search of a job, supported by skills
assessment schemes
Improving career guidance is an important option, especially to 1) support the redirection of
pupils and students to engineering occupations in the sector, and 2) to assist in supporting
placement of mature workers which are threatened of becoming unemployed. In the sector
scenarios it is expected that low skilled occupations like labourers and support staff as well as
medium-skilled electric and electronic equipment mechanics and fitters will decrease either
by natural fluctuation or by layoffs. Career guidance assists in finding new job possibilities
within or outside the sector. In combining career guidance with skills assessments as well as
with the recognition of soft skills the scope for placements can be expanded.

Career guidance for mature lower-skilled workers could be supported by an assessment of
those skills which are not certified or documented so far. Systems for the recognition of prior
learning (RPL) support the determination to what extent people possess necessary
competences for a new job (Duarte, 2004). The integration of RPL in career guidance and
targeted training bridges the gap of hidden competences especially for mature workers. Some
Member States included RPL in their system. In Portugal, for instance, a National System of
Recognising, Validating and Certifying Prior Learning (RVCC) is implemented through a
network of centres. Adults, whether employed or unemployed, are offered a three-tiered
service, namely information, counselling and complementary training, including the
accreditation of competencies (OECD/European Communities, 2004: 31). The centres are
supported by the Ministry of Education and are run by training organisations or universities.
The certification and validation of skills is undertaken by a jury with an external evaluator.

Career guidance can be supported by user friendly online-tools, also for self guidance. A
good example in this respect is the German website http://www.think-ing.de/ (October 2008)
in which information about educational and training pathways, and the relevant occupations
they lead to is shown. In addition, other information about the sector is published online.
Career guidance is undertaken in most countries by several different actors such as schools,
training organisations, public employment authorities and related career information centres,
unions, universities, sector organisations and companies. To enhance career guidance a solid
regional co-ordination between different stakeholders can be very effective, in particular in
those cases, where the relevant target group can be addressed directly. This is for example the
case in the “science-truck”22, a mobile career information centre of the technical university of
Aachen.




22
     http://www.rwth-aachen.de/go/id/hhx/ (October 2008)


                                                                                             136
8) Increase co-operation to improve the information systems on skills and knowledge
needs and job opportunities
Information asymmetry is not only an issue for labour market entrants, but also for school
leavers searching for further education pathways. Consequently, a mismatch between actual
VET supply and demand in quality as well as - to a lower extent - in quantity is observed for
some occupational functions. Information systems at the sectoral level as well as at the
regional, the national and the European level can assist in minimising information
asymmetries in order to overcome skills gaps resulting from information deficits. Facilitating
students by entering the labour market and finding a suitable occupation is just as important
as assisting employees to find new job opportunities based on their existing skills or guiding
them in finding the fitting vocational training course.

A close collaboration between all relevant stakeholders, such as companies, education and
training organisations, social partner organisations, research institutions and public
authorities, supports minimizing information deficits on current and emergent skills needs.
The old system has to adapt to the new situation and collaboration is an effective instrument
to stimulate the implementation of changes in VET. A strong linkage between industry and
education and training is recommended in state driven full-time school-based VET-Systems
(Koch and Reuling, 1998).

An example of a way to overcome the information gap and resulting mismatch between
available and required qualifications in technical and R&D occupations is to take a stronger
look at research and development expenditure in the sector. ILO (ILO 2002: 21) is convinced
that by doing so the mismatch can be overcome. One idea is to build up structured and
detailed reporting systems about research and development (R&D) expenditure for the sector.
Emerging technical skill needs can therewith be detected quite early. Training institutions and
universities can use this information for redirecting their curricula.

In all countries and, in particular, in the new Member States, co-operation are essential to
improve the practical orientation in VET (Skjølstrup and Mayen, 2007). The ‘Sector skills
councils’23 in the United Kingdom and the ‘FreQueNz’ research network24are examples of
such.

The ‘Sector skill councils’ in UK are funded by the Department for Innovation, Universities
and Skills and are part of the government’s skills strategy for the 21st century. The councils
ensure that individuals gain the skills they need so that persons with fitting skills are
available. Sector skills strategies are defined for each sector based on the analysis of present
and future skills needs.

FreQueNz is a research network located in Germany and funded by public means. The
network comprises scientific institutes, education and training organisations, social partner
organisations, companies and public authorities and contributes to early identification of
qualification needs. This network has conducted a number of evaluative research projects on
human and ICT resources, staff qualifications, tests, career guidance for adults, computerised
career guidance programmes, and beneficiaries of guidance services.




23
     www.sscalliance.org
24
     www.frequenz.net


                                                                                            137
Annex I. Contributors to this study

This report appears in a series of 11 sector reports on the future jobs and skills commissioned
by the European Commission and executed by a core consortium of TNO (Delft/Leiden, the
Netherlands), SEOR Erasmus University (Rotterdam, the Netherlands) and ZSI - Zentrum für
Soziale Innovation (Vienna, Austria). The consortium was led by Dr F.A. van der Zee (TNO
Innovation Policy group; TNO Innovation & Environment).



Part I:
Dr. F. van der Zee (TNO Innovation and Environment)
A. van der Giessen (TNO Information and Communication Technology)
S. van der Molen (TNO Innovation Policy Group)
S. de Munck (TNO Information and Communication Technology)
D. Maier (ZSI Centre for Social Innovation)



Data collection and analysis Part I :
Dr W. Manshanden (TNO Innovation and Environment, Delft, the Netherlands)
E. Rietveld (Innovation and Environment, Delft, the Netherlands)
A. Bouman-Eijs (Innovation and Environment, Delft, the Netherlands)



Parts 2 and 3:
Dr. F. van der Zee (TNO Innovation and Environment)
A. van der Giessen (TNO Information and Communication Technology)
D. Maier (ZSI Centre for Social Innovation)




                                                                                           138
Annex II. Participants final workshop, Brussels 20-21 November 2008

Name participant                                                    Organisation
Annelieke van der Giessen                                        Researcher, TNO

Arthurs Puga                      Forward Studies Unit, Latvia University of Latvia

Caroline Holmqvist                   Council of European Employers of the Metal,
                                     Engineering and Technology-Based Industries
                                                                    (CEEMET)

Caroline Jacobsson               Information & Communications Advisor, European
                                            Metal Workers Federation (FEM/EMF)

Dan Adrian Beclesanu              Romanian Association for Electronic Industry and
                                      Software (ARIES)-Electotechnique Sectoral
                                                                       Committee

Frans van der Zee                                Strategist / senior economist, TNO

Isabelle Biais                       Council of European Employers of the Metal,
                                     Engineering and Technology-Based Industries
                                                                    (CEEMET)

Jean-François Lebrun                             European Commission, EMPL F3

Leo Laaksonen                     CENELEC Board Member, Federation of Finnish
                                                       Technology Industries

Manuel Hubert                                    European Commission, EMPL F3

Michal Spiechowicz                                European Commission, ENTR/14

Peter Szovics                                                           CEDEFOP

Radoslaw Owczarzak                  Research manager, EMCC / Eurofound, Dublin

Sebastiano Toffaletti                       Secretary General, PIN-SME, UAPME

Ursula Huws                        Professor, International Labour Studies, London
                                                           Metropolitan University;
                                  Director Analytica Social and Economic Research
                                                                               Ltd.




                                                                                  139
Annex III Strategic options – a detailed description
A. Recruiting workers from other sectors
A possible solution to meet skill needs is to recruit workers from other sectors, which have
and can provide the skills and knowledge needs of the sector and more specifically the firm.
Whether or not this is a desirable option depends, amongst others, on the job function under
consideration. For managers of large corporations it is quite usual to bring their general
know-how to bear in different sectors. Also for business professionals (e.g. financial analysts,
software engineers) sector specificities are of lesser importance. Sector mobility of low
skilled workers is much more limited than the mobility of higher educated employees. The
lesser the grade of sector specialisation of the occupational profile, the easier employees are
able to change between sectors. In other cases recruiting workers from other sectors will need
training of sector specific skills. In some cases it will also be possible for highly specialised
workers to change sectors.


B. Recruiting workers from other Member States
Recruiting workers from other Member States could be in some cases a possibility to
overcome skills problems. However, owing to language, cultural and other problems,
including certain entrance barriers left to the Member States, mobility within the European
Union is still underdeveloped. Border regions are attracting workers from other countries
mainly because of wage advantages and in this way can succeed in solving their skills
shortages and gaps. However, regions that face such outward migration (e.g. Poland, East
Germany, Parts of Austria, Hungary, Czech Republic, Slovenia, Bulgaria) at the same time
face serious problems in meeting their labour market demands. Some have responded by
recruiting workers from non-Member States. Even if this might appear a temporary problem,
from a longer term perspective, such developments could have serious consequences for the
growth of the regional economy – in what might be termed a ‘skills drain’ (cf. ‘brain drain”).


C. Recruiting workers from non-Member States
Recruiting workers from non-Member States is not a zero-sum game for the European
economy. Yet this strategic choice is as limited in its overall impact as the strategic choice
that proposes to recruit workers from other Member States. On top of this, such recruitment is
much more difficult that recruitment from within the EU. In all Member States significant
barriers for entering the labour market for workers from outside the EU exist, even for
temporary workers. To increase the influx of these workers by, e.g. increasing the
immigration quota several political hurdles have to be mastered. Action can be taken here at
Member State as well as at EU level, the recent ‘blue card’ proposal and negotiations serving
as an example.

D. Recruiting unemployed workers with or without training
Recruiting unemployed workers without training is a strategic option, especially in case of
skill shortages if there are not enough skilled workers to meet the employers demand). This
option should in these cases be combined with adequate training. Unemployed workers might
have various placement handicaps, especially skills deficits and poor levels of basic
qualifications. Low educated groups are still representing the majority of the unemployed
labour force, but also highly skilled workers like engineers could be threatened by
unemployment.



                                                                                             140
E. Recruiting young people coming from the education system, with or without re-training
This strategic choice is always a possibility to overcome skill shortages as well as skill gaps.
But demographic change should be taken into account too. While in the next few years, until
around 2015, there will be a continuous inflow of students entering the labour market, a
significant reduction is expected in 2020. In some EU regions there is already a need for
young qualified and skilled workers and apprentices. Even where sectors may pay relatively
high wages and offer stable carrier prospects, it is not easy to attract enough labour in critical
occupational functions. While in the last years labour in business and finance professionals as
well as administrative staff and customer services could be attracted the situation in technical
occupations (engineers/technicians, construction workers, plant operators) is still critical.
Hence, the recruiting of young people can only be successful, if this measure is supported
with the other strategic options such as “Improving the image of the sector” and “Stronger
cooperation within the industry”. To be more precise, a stronger cooperation between
schools, university, training organisations, career managers on the one hand and the industry
on the other is needed. The principal aim should be to overcome the mismatch of
requirements and wishes of individuals on the one hand and the economy on the other.

F. Training employed workers
In some cases training and re-training could also constitute a strategic choice to meet skill
demands. In this case, the employee will be trained for a new working place or task. In
general, re-training ends with a formal graduation or certificate. Re-training is an option if the
work place or the occupational function is not needed any more. But re-training is only one
option. Further education or further training, refresher training and updating courses, or
advanced vocational qualification to adapt the workforce to emergent skills needs are also
options, which should be taken into account. Re-training or further training of employees can
encompass all levels of skills. Training and qualification could be done in-house and on the
job as well as by an external education institution. It is more likely that less fundamental
variations of up-skilling or re-training will be a strategic choice because re-training has to be
regarded as a long term and quite expensive measure compared to the other vocational
education forms.

G. Changing the work organisation
Work organisation can be defined in different ways. First, it can be defined as a system of
work organisation (e.g. Taylorims, Fordism and Post-Fordism) and second, as a form of
division of labour and specialisation. In modern economies productivity is based on the
division of labour which by definition implies also a division of skills. There are several
instruments of work organisation to react on skill shortages and gaps. Thus, changes in the
work organisation can help to overcome skill gaps. In general, work can be reorganised in the
following possible ways:
-   Group work: A group is a limited number of people who work together over a longer
    period with a frequent, direct interaction. A group is defined through the differentiation of
    roles and joint values. Groups are able to produce better results than single persons due to
    the combination of different competencies and experiences, the reduction of wrong
    decisions, stronger work motivation, the direct use of information, new insights and
    creativity and a better acceptance of decisions, just to mention a few of the many
    advantages. There are several kinds of group work, like project groups, quality groups
    and learning circles, as well as committees.
-   Job rotation: Within this type of work organisation several people change their work
    places in a planned alteration. Job rotation enhances the overview of the different


                                                                                              141
    production processes, the understanding of different tasks and the feeling for group work.
    Additionally, monotony and dissatisfaction are reduced.
-   Job enlargement: Extension of the scope of work through the combination of several
    structurally equal or similar tasks. It can produce similar effects as job rotation.
-   Job enrichment: Extension of the scope of work through the combination of several
    structurally different tasks. The scope of decision making and self-control increases, as
    well as the quality and quantity of work. In general, up skilling of the employee is
    necessary, but this is also implemented on the job.
Under the influence of new technologies, like information and communication technologies,
virtual forms of work organisation, which substitute hierarchies through a horizontal network
co-ordination, are also possible. In this sense, mergers and acquisitions as well as project
based business colloboration are also available options to change the work organisation. Both
measures are strategic possibilities to get access to needed resources or to incorporate new
skills. Modern (communication) technology can support the co-ordination and co-operation
of labourers working at different places and in combining their respective strengths.

H. Outsourcing and offshoring
In public discussion the terms outsourcing and offshoring are mainly used together, yet it
must be emphasised that they describe different technical approaches. While outsourcing
means the transfer of management or day-to-day execution of business functions or processes
(production, manufacturing, services) to an external service provider, offshoring describes the
relocation of business functions or processes from one country to another. Both could be
applied as a strategic choice on company level to meet skill needs, by integrating the
knowledge, experience and competences of the other firm in the production process.
Outsourcing of personnel as a result of technological change and economic pressure was and
still is an ongoing trend. Due to de-regulation and privatisation several tasks and with it skills
and competences in the sector were outsourced and in some countries dislocated to other
countries to increase labour productivity. Several occupational functions in the production
chain have been outsourced nowadays. Skill gaps can be closed by hiring subcontractors with
the needed knowledge and competences. If one considers this strategic option to meet skill
needs, it has to be taken into account that for subcontracting firms, freelance or contractual
workers continuing vocational training often plays a marginal role, because employees are all
too often indispensible. One should also bear in mind that freelancers are not available at any
time and in unlimited numbers. Outsourcing and offshoring is therefore a limited strategic
option to overcome skill gaps. It seems to be more adequate to overcome skill shortages.

I. Changing vocational education
Changing vocational education has a long-term effect. It must be taken into account that
changes will have a substantial impact in quality and quantity starting at the earliest within
three years time after the changes. The process of changing initial vocational education in
content or in structure takes itself several years. The process from defining the needs and
problems to the implementation of a new curriculum involves several stakeholders from
different expert levels like companies, social partner organisations, training institutes as well
as representatives of national and regional education administration. These bargaining
processes could take several years and are dependent of the VET-system of the European
Member State. Hence, this strategic choice will only be drawn if major structural changes are
expected.
Despite these facts, possible changes can be seen in a stronger modularisation of curricula of
initial vocational training as well as in building up or strengthening interplant and


                                                                                              142
interregional training infrastructure. The first option could in the long run help to overcome
identified skill needs in a sound, flexible and a relatively quick way. The second option is
amongst others a possibility to provide the latest high-value equipment for training quickly
by sharing resources of several partners.

J. Designing and offering new courses (continuing vocational education and training)
Once it is clear that the current content of vocational training is not up to date and therefore
does not address the demands, the development of new courses for continuing vocational
education and training could be a strategic option with a short term impact (see also M.
Stronger cooperation between stakeholders).

K. Providing information about jobs and (emerging) skills
There is still a lack of transparency concerning current and emerging skill needs and job
opportunities in different economic sectors. Information systems on regional, sectoral,
national or European level could help to minimise information asymmetries and in that way
overcome skill gaps resulting from information deficits. As a consequence, it could prove
highly effective in helping students to enter the labour market and find a suitable occupation,
just as much as in assisting employees to find new job opportunities based on existing skills
or guide them in finding the suitable vocational training course.
Career guidance impacts rather short term. Therefore, it can help to overcome the mismatch
between the needs and interest of the individual and those of the prevailing economy. The
basic assumption of this strategic choice is that there already exist people who are equipped
with the required skills and qualifications, but, due to a lack of information about the labour
market possibilities, do not apply for these jobs. Career guidance for students and employees
can help to overcome this mismatch. In this respect there can be a clear connection to
training. Systems for recognition of prior learning (RPL) can help to determine to what extent
people possess necessary competences for a new job. Targeted training can bridge the gap for
the failing competences.

L. Improving the image of the sector
Improving the image of the sector could be an easy and suitable measure especially to
overcome skill and labour market shortages and attract new employees. Several instruments
could be implemented by sector organisations in co-operation with different non sector actors
like schools, career management organisations, training organisation, public employment
services, and public administration. Instruments could be company visits for pupils, offering
internships for pupils and enhanced public relation. Especially in sectors where framework
conditions and occupational functions changed fundamentally, due to technological or
organisational restructuring or low wage levels, this offers a possibility to overcome
stereotypes as much as old fashioned views and to attract more labour. Moreover, this
measure does not only provide a chance to overcome stereotypes in relation to the sector but
also to some occupational functions. The effect of this strategic option is long-term. In
consideration of the apprenticeship system, which can take up five to seven years (if the
specialisation of high qualified jobs in the sector is taken into account) until the volume effect
is reached, one must arrive at the conclusion that in some occupational functions it has to be
initiated right now.




                                                                                              143
M. Stronger cooperation with the industry
A stronger co-operation between industry and training institutes on a regular basis is one
possibility to meet the skill needs in the sector. In some sectors and countries training of
employees does not seem to be in line with the industry’s emerging needs. New training and
teaching solutions are to be developed between the industry, sector representatives, education
institutions and research centres, public bodies, etc. Information exchange and a stable
cooperation between the relevant stakeholders could improve the matching of training needs
and demands. In the long run it will enhance the efficiency of training output, strengthen the
quality of training and maximize the individual potential. To build up this kind of cooperation
takes time, but in the long run it might well be capable to provide accurate solutions for
problems. Networks and partnerships between these stakeholders to forecast skill needs in the
sectors also present a long term measure. They could help to define emergent skill needs.
While knowledge about the development of skill supply is quite high, the knowledge about
the development of skill demand in different sectors is still improvable. These kinds of
networks can cooperatively detect the need for action and contribute to the development of
recommendation of actions.




                                                                                           144
References
Accenture (2003) ‘Strategic Outsourcing: Electronics Manufacturing Transformation in
      Changing Business Climates’, Article by Al Delattre, Tom Hess and Ken Chieh
      (Accenture), Available from:http://www.accenture.com/NR/rdonlyres/1F439C99-
      8359-4364-BCAD-9BBB5612CB46/0/out10.pdf

Abicht, L., Freikamp, H., Schumann, U. (2006) Identification of skills needs in
       nanotechnology, edited by Tessaring, M., Strietska-Ilina, O., Zukersteinova, A.,
       CEDEFOP Panorama series 120, Luxembourg.

Barrios, S., M. Mas, E. Navajas and J. Quesada (2008) Mapping the ICT in EU Regions:
       Location, Employment, Factors of Attractiveness and Economic Impact. IPTS,
       European Commission JRC EUR 23067

Bonser, G., Daniel, W.W., Grice, R., Hogarth, T., Saunders, D., Wilson, R. (2006) Multi
       sector skills study: Electronic Industry, study prepared for the Department of Trade
       and Industry.

CAFOD (2004) Clean up your computer: Working conditions in the electronics sector,
    information report of the Catholic Agency for Overseas Development, Available
    from: http://www.cafod.org.uk/var/storage/original/application/phpYyhizc.pdf

Cedefop (2008) “Terminology of European Education and Training Policy” Luxembourg:
      Publications Office, 2008.

Cleff, T., C. Grimpe, C. Rammer, A. Schmiele and A. Spielkamp (2007) Analysis of
        Regulatory and Policy Issues Influencing Sectoral Innovation Patterns, Europe
        INNOVA Innovation Watch. Interim Paper. April 30th, 2007

Clematide, B., Dahl, A., Vind, A., Joergensen, C.h. (2005) ‘Challenges for the Danish VET-
      system – on the path towards a future model’, in: bwp@issue 7, http://www.bwpat.de

Cloodt, M; J. Hagedoorn and N. Roijakkers (2006) ‘Trends and patterns in inter-firm R&D
       networks in the global computer industry: an analysis of major developments, 1970-
       1999’, Business History Review 80, pp. 725-746

Competitiveness (2008) ICT clustering efforts in Sophia, European Cluster Mapping Project
     “Identification, analysis and monitoring of business clusters in Europe”, Case study
     for the Commission of the European Communities Enterprise and Industry
     Directorate-General, www.competitiveness.com.

CBI (2005) Occupational health and safety (OHS) issues in the electronics sector, report
       from the Centre for the Promotion of Imports from developing countries

DTI (ed.) 2005: Electronics 2015 – Making a visible difference, Electronics Innovation and
       Growth Team report




                                                                                           145
Danish Technological Institute - DTI (2008) Impact of Global Sourcing on e-Skills, Brochure
       prepared in relation to the stud ‘Impact of Global Sourcing on e-Skills’ for the
       European Commission in 2008

Duarte, I.M. (2004) ‘The value of experimental learning in the centres of Recognition,
       Validation and Certification of Competences’, in: Lima, L., Guimaraes, P. (ed.):
       Perspectives of adult education in Portugal, Braga.

Ecotec (2005) “Glossary of key terms” European Inventory: validation of non-formal and
       informal learning Available from:
       http://www.ecotec.com/europeaninventory/glossary.html [Accessed: 06.03.2009]

EECA/ESIA (2005) The European Semiconductor Industry (2005) Competitiveness report,
     Report by the European Semiconductor Industry Association (ESIA) and the
     European Electronic component manufacturers (EECA), Brussels. Available at:
     http://www.eeca.eu/data/File/ESIA%20Publications/ESIA%20exec%20summary%20
     EN.pdf

EICC (2008) Electronic Industry Code of Conduct, available from:
      http://www.eicc.info/code.html

EIGT (2004) Electronics 2015. Making a visible difference. Electronics Innovation and
      Growth team report, United Kingdom.

Electra (2008) Twenty solutions for growth and investments to 2020 and beyond

EMTA (ed.) (2001) Skills needs in Electronics, Study prepared by the Institute for
     Employment Studies (IES) Brighton.

ESIA (2008) Latest Semiconductor sales data, for immediate release, Release from the
      European Semiconductor Industry Association, Brussels, February 2008, Available at:
      http://www.eeca.eu/data/File/ESIA_WSTS_PR1207.pdf

ETEPS (2007) Study on the trends in European public and private investments in ICT R&D
     and on the globalization of R&D and the competitiveness of the European innovation
     system in ICT, Draft Final Synthesis Report, report from the European Techno-
     Economic Policy Support Network, 2007

ETF (1997) “Glossary of labour market terms and standard and curriculum development
      term” European Training Foundation, Turin.

European Commission (2002a) Directive 2002/95/EC of the European Parliament and of the
      Council of 27 January 2003 on the restriction of the use of certain hazardous
      substances in electrical and electronic equipment, Directive of the European
      Parliament and of the Council, Available from: http://eur-
      lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32002L0095:EN:HTML,
      accessed at 16 April 2008

European Commission (2002b) Directive 2002/96/EC of the European Parliament and of the
      Council of 27 January 2003 on waste electrical and electronic equipment (WEEE) -
      Joint declaration of the European Parliament, the Council and the Commission
      relating to Article 9, Directive of the European Parliament and of the Council ,


                                                                                          146
       Available from: http://eur-
       lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32002L0096:EN:HTML

European Commission (2004a) E-Skills for Europe: Towards 2010 and beyond, Synthesis
      report of the European E-Skills Forum, September 2004

European Commission (2004b) Trade Issues: Electronic sector, website of the Directorate
      General Enterprise of the European Commission, Available at:
      http://ec.europa.eu/trade/issues/sectoral/industry/electro/index_en.htm

European Commission (2005) Working together for Growth and Jobs. A new Start for the
      Lisbon Agenda. Communication to the Spring European Council. COM (2005) 24.
      02.02.2005

European Commission (2006) Fostering the Competitiveness of Europe’s ICT Industry,
      report from the ICT Taskforce, November 2006, Available from:
      http://www.eeca.eu/data/File/ESIA%20Publications/icttf_report_exe_theme_paper.pd
      f, accessed at 22 February 2008

European Commission (2006a) Regulation (EC) No 1907/2006 of the European Parliament
      and of the Council of 18 December 2006 concerning the Registration, Evaluation,
      Authorisation and Restriction of Chemicals (REACH), establishing a European
      Chemicals Agency, amending Directive 1999/45/EC and repealing Council
      Regulation (EEC) No 793/93 and Commission Regulation (EC) No 1488/94 as well as
      Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC,
      93/105/EC and 2000/21/EC, Regulation of the European Parliament and of the
      Council, Available from: http://eur-
      lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:396:0001:0849:EN:PDF,
      accessed at 23 April 2008

European Commission (2006b) Innovation in R&D, manufacturing and services, Report from
      the Task-Force on ICT Sector Competitiveness and ICT Uptake, workgroup 3,
      October 2006, Available from::
      http://www.eeca.eu/data/File/ESIA%20Publications/wg3_report.pdf

European Commission (2006c) ICT Equipment markets: Forward-Looking perspective of
      EU-China Trade & Investment Relations, European Commission, DG Trade,
      Available from: http://trade.ec.europa.eu/doclib/docs/2006/july/tradoc_129425.pdf

European Commission (2007) European competitiveness report 2007, Report from the
      Directorate-General for Enterprise and Industry, European Commission,

European Commission (2007b) Environmentally-friendly design of Energy-using Products:
      framework Directive for setting eco-design requirements for Energy-using Products
      (EuP), Available from: http://ec.europa.eu/enterprise/eco_design/index_en.htm

European Commission (2008) New Skills for New Jobs. Anticipating and Matching Labour
      Market and Skills Needs. Communication from the Commission to the European
      Parliament, the Council, the European Economic and Social Committee and the
      Committee of the Regions. COM (2008) 868/3. {SEC (2008) 3058}




                                                                                      147
European Commission (2008a) A European Economic Recovery Plan. Communication from
      the Commission to the European Council. COM (2008) 800 final. Brussels,
      26.11.2008

European Commission (2008b) The European Qualification Framework for Lifelong
      Learning, Brussels.

European Commission (2008c) Commission Staff Working document accompanying the
      Communication from the Commission to the European Parliament, the Council, the
      European Economic and Social Committee and the Committee of the Regions. New
      Skills for New Jobs. Anticipating and Matching Labour Market and Skills Needs.
      SEC (2008) 3058/2. {COM (2008) 868}

European e-Competence Framework version 1.0 CWA September 2008,
      www.ecompetences.eu

European Foundation for the Improvement of Working and Living Conditions (2007) Fourth
      European Working Conditions Survey, Luxembourg: Office for Official Publications
      of the European Communities, 2007

Eurostat (2007a) European Business - Facts and figures, 2007

Eurostat (2007b) NACE Rev. 2, Structure and explanatory notes, Final Draft, Eurostat - Unit
       02, Statistical governance, quality and evaluation, 26.03.2007

Eurostat (2007c) ‘Manufacturing of optical, medical and other precision instruments in the
       EU’, Statistics in focus, 51/2007

Eurostat (2008) Labour Force Statistics, Brussels.

Evertiq.com (2008) ‘Consumer Electronics driving the outsourcing trend in the EMS
       Industry’, 13 February 2008, Evertiq New Media AB,
       http://www.evertiq.com/news/print-body.do?news+10186&cat=1, accessed at 25
       February 2008

Frenzel, K., Sottong, H., Müller, M. (2001) Frauen und Führung. Bleibt Dornröschen
       ungeküsst? Storytelling-Studie zum Thema, München.

ICT Task Force (2006) Fostering the Competitiveness of Europe’s ICT Industry, EU ICT
      Task Force Report November 2006

IDC (2008) OEM Manufacturing Value Chain, factsheet of the International Data
      Corporation, Available from:
      http://www.idc.com/getfile.dyn?containerId=IDC_P15562&attachmentId=46728444
      &Id=null

IFO (2005) Introduction to the Mechanical and Electrical Engineering Sectors of new EU
       Member States, report from the Institute for Economic research at the University of
       Munich, November 2005




                                                                                         148
ILO (1998) “ILO thesaurus = Thesaurus BIT = Tesauro OIT: labour, employment and
       training terminology” International Labour Organisation, Available from:
       http://www.ilo.org/public/english/support/lib/tools/aboutthes.htm

ILO (2002) Lifelong learning in the mechanical and electrical engineering industries, Report
       for discussion at the Tripartite Meeting on the Production of Electronic Components
       for the IT Industries: Changing Labour Force Requirements in a Global Economy,
       Geneva.

ILO (2007) The production of electronic components for the IT industries: Changing labour
       force requirements in a global economy, Report for discussion at the Tripartite
       Meeting on the Production of Electronic Components for the IT Industries: Changing
       Labour Force Requirements in a Global Economy, report from the International
       Labour Organization, Geneva.

IPTS (2007a) Business R&D in Europe: Trends in Expenditures, Researcher Numbers and
       Related Policies, report from the Institute of Prospective and Technological Studies

IPTS (2007b) Mapping European Investment in ICT R&D, internal deliverable for REDICT
       WPA5, prepared by Geomina Turlea and Martin Ulbrich, 22 February 2007

Koch, R., Reuling, J., (1998) ‘Institutional framework conditions and regulation of initial
       vocational training using Germany, France and Great Britain as examples’. In:
       CEDEFOP: Vocational education and training – the European research field,
       Background report, Volume I, Thessaloniki 1998

Mason, S.J. e.a. (2002) ‘Improving electronics manufacturing supply chain agility through
      outsourcing’, in: Mason, S.J.; M.H. Cole; B.T. Ulrey and L. Yan, International
      Journal of Physical Distribution & Logistics, Vol 32, No 7, pp 610-620,

ME-Analysen (2003) Zukunft der Metall- und Elektro-Industrie, Ergebnisse der
     Arbeitsgruppe „Zukunft der M+E-Industrie“,

OECD (2001) The Well-Being of Nations: the Role of Human and Social Capital, Paris:
     OECD

OECD (2006) OECD Information Technology Outlook 2006, study by the Organisation for
     Economic Co-operation and Development

OECD (2007) “Qualifications systems: bridges to lifelong learning = Systèmes de
     certification: des passerelles pour apprendre à tout âge” Organisation for Economic
     Cooperation and Development, Paris.

OECD/European Communities (2004) Career Guidance – A handbook for policy makers,
     OECD: Paris

Photonics 21 (2007) Photonics in Europe: Economic Impact, study by Optech Consulting,
       published by the European Technology Platform Photonics 21, Available at:
       http://www.photonics21.org/pdf/Brosch_Photonics_Europe.pdf, Accessed at 21 April
       2008




                                                                                              149
PICTEF (2006) Competitiveness and performance indicators 2005 Pharmaceutical industry
     competitiveness task force, Available from:
     http://www.advisorybodies.doh.gov.uk/pictf/2005indicators.pdf

Reed Business Information (2008) ‘Electronics manufacturing grows in Eastern Europe:
      Labor costs and increased foreign investments are helping to make Eastern Europe the
      next hotspot in electronics manufacturing’, article by James Carbone, in: Purchasing,
      14 July 2007, Available from:
      http://www.purchasing.com/article/CA6458598.html?industryid=2161, accessed at 26
      February 2008

Rodrigues, M.J. (2007) Innovation, Skills and Jobs. Pilot Project to Develop a European
      Foresight Methodology to Identify Emergent Jobs and Their Skills Needs, Working
      Document 2007.03.29

SEMTA (2008) Skills Needs Assessment for the Metals, Mechanical Equipment and
    Electrical Equipment Sector,. UK SSA Stage 1 Report, Watford.

Skjølstrup, K-A. and G. Mayen (2007) ‘Vocational schools in transition: dead end streets or
        the gate to prosperity? – Key elements for the development of local human resource
        development providers’, in: ETF Yearbook 2007, Quality in vocational education and
        training: Modern vocational training policies and learning processes, Turino.

Tessaring, M. (2004) ‘Early identification of skills needs: European activities and
       perspectives’, in Susanne Liane Schmidt; Olga Strietska-Ilina; Manfred Tessaring,
       Bernd Dworschak (eds.), Identifying skills needs for the future From research to
       policy and practice, Luxembourg: Office for Official Publications of the European
       Communities, 2004 (Cedefop Reference series, 52), p. 231-240.

Tissot, P. (2004) “Terminology of vocational training policy – A multilingual glossary for an
        enlarged Europe” Cedefop, Luxembourg: Publications Office,.

US Department of Labor (2008) The 2008-09 Career Guide to Industries: Computer and
      Electronic Product Manufacturing, website of the US Department of Labor, Available
      from: http://www.bls.gov/oco/cg/print/cgs010.htm

Van der Zee, F.A, W. Manshanden, W. Jonkhoff & F. Brandes (2007) Delocalisation of EU
      Industry – the challenge of structural adjustment. European Parliament Committee for
      Industry     Technology,      Research      and     Innovation,   Available   from:
      http://www.europarl.europa.eu/meetdocs/2004_2009/documents/dv/itre_2006_15_fin
      al_/itre_2006_15_final_en.pdf

VDI (ed.) (2004) Weiterbildungsbedarf von Fach- und Führungskräften mit akademischen
      Abschluss in KMU bei den Optischen Technologien, Empirische Studie, Autorenteam
      unter Leitung von Lothar Abicht, isw Institut für Strukturpolitik und
      Wirtschaftsförderung gemeinnützige Gesellschaft mbH, Optische Technologien Aus-
      und Weiterbildung (AuW), Band 3, Düsseldorf.

VDI (ed.) (2005): Qualifizierungsbedarf Optische Technologien Perspektive der
      Großunternehmen, Fallstudien. Wiebecke Novello-von Bacherer, Institut für




                                                                                           150
       Wissenstransfer an der Universität Bremen GmbH, Optische Technologien Aus- und
       Weiterbildung (AuW), Band 5, Düsseldorf.

Williams, E (2004) ‘Energy Intensity of Computer Manufacturing – Hybrid Assessment
       Combining Process and Economic Input – Output Methods’, in: Environmental
       Science & Technology, Vol 38, No 22, pp 6166-6174

Winterton, J. (2005) The role of Social Dialogue in European Approaches to Vocational
       Training

Wintjes, R., Dunnewijk T. (2008) Sectoral Innovation Systems in Europe: the Case of the
       ICT Sector, Europe INNOVA Innovation Watch, 9 May 2008

ZVEI (ed.) (2003) Herausforderung Soziodemografischer Wandel. Good-Practice in der
      Elektrotechnik- und Elektronikindustrie, Dortmund.




                                                                                          151
Glossary

Apprenticeship. Systematic, long-term training alternating periods at the workplace and in
an educational institution or training centre. The apprentice is contractually linked to the
employer and receives remuneration (wage or allowance). The employer assumes
responsibility for providing the trainee with training leading to a specific occupation.
(Cedefop, 2004)

Competence. Competence refers to the proven ability to use knowledge, skills and personal,
social and/ or methodological abilities, in work or study situations and in professional and
personal development. In the context of the European Qualifications Framework, competence
is described in terms of responsibility and autonomy;

Compulsory education. The minimal legal standards and duration of obligatory schooling.
(ILO, 1998)

Concentration index. The concentration index assesses the relative contribution of a specific
sector to the national economy compared to a greater entity, such as the EU, thereby
correcting for the size of the country. In more general terms, the concentration index is a
measure of comparative advantage, with changes over time revealing changes in the
production structure of a country. An increase of the concentration index for a sector signifies
relatively fast growth of that particular sector in the country concerned compared to the same
sector in the EU. How does the concentration index work in practice? A few (hypothetical)
examples: if sector x represents a 5% share of the German economy and a 5% share of the
EU economy, the concentration index of sector x equals a 100. If sector x represents 5% of
the German economy, but 10% of the EU economy, the concentration index of sector x is 50.
If the same sector x represents 10% of the German economy and 5% of the EU economy, the
concentration index of sector x is 200.

The concentration index concept can be applied using different indicators (variables). In our
study we measure the concentration index using employment, value added and trade, in order
to make a distinction between the relative performance of countries EU-wide. We distinguish
between four country groupings, each signifying a different sector performance over time. If
a sector in a country has a strong position (hence showing a concentration index higher than
100) and has experienced a clear index growth over the last years, the sector is defined as
winning in that country. If the sector has a strong position, but experienced a decline of the
concentration index, we say the sector is losing momentum. If the sector has a weak position,
but gained in the past, we say that the sector in that country is upcoming. If the sector has a
weak position and experienced a decline of the index, we say that the sector is retreating.

Employability. The degree of adaptability an individual demonstrates in finding and keeping
a job, and updating occupational competences. (Cedefop, 2000)

European Credit system for Vocational Education and Training (ECVET). A device in
which qualifications are expressed in units of learning outcomes to which credit points are
attached, and which is combined with a procedure for validating learning outcomes. The aim
of this system is to promote:
 • mobility of people undertaking training;
 • accumulation, transfer and validation and recognition of learning outcomes (either
     formal, non-formal or informal) acquired in different countries;


                                                                                            152
 • implementation of lifelong learning;
 • transparency of qualifications;
 • mutual trust and cooperation between vocational training and education providers in
   Europe. (Cedefop)

European Qualification Framework for life-long learning (EQF). A reference tool for the
description and comparison of qualifi cation levels in qualifi cations systems developed at
national, international or sectoral level. (Cedefop)

Full-time Employment. Traditionally means a 'regular job'. Work that is about eight hours a
day, five days a week and forty-eight weeks of the year with four weeks paid leave.

Informal learning. Learning resulting from daily activities related to work, family or leisure.
It is not organised or structured in terms of objectives, time or learning support. Informal
learning is in most cases unintentional from the learner’s perspective. (Cedefop, 2008)

Interdisciplinary (multidisciplinary). Interdisciplinary refers to research or study that
integrates concepts from different disciplines resulting in a synthesised or co-ordinated
coherent whole. New disciplines have arisen as a result of such syntheses. For instance,
quantum information processing amalgamates elements of quantum physics and computer
science. Bioinformatics combines molecular biology with computer science. An
interdisciplinary team is a team of people with training in different fields. Interdisciplinary
teams are common in complex environments such as health care.

Job mobility. Any change of job, regardless of where the new job is located.

Knowledge. Knowledge refers to the outcome of the accumulation of information through
learning. Knowledge is the body of facts, principles, theories and practices that is related to a
field of work or study. In the context of the European Qualifications Framework, knowledge
is described as theoretical and/or factual.

Knowledge society. A society whose processes and practices are based on the production,
distribution and use of knowledge. (Cedefop, 2008)

Learning outcomes. Learning outcomes refer to statements of what a learner knows,
understands and is able to do on completion of a learning process, which are defined in terms
of knowledge, skills and competence.

Lifelong learning. All learning activity undertaken throughout life, with the aim of
improving knowledge, skills/competences and/or qualifications for personal, social and/or
professional reasons. (Cedefop, 2008)

Low, medium, high educated. See also under qualifications. The Labour Force Survey
(LFS) collects data for a number of characteristics of employees, one being the level of
education of an employee. The LFS is is based on the ISCED 1997 classification
(International Standard Classification of Education).
 • Low-educated encloses all levels up to the compulsory education (ISCED 1+2). ISCED
    1: primary education or first stage of basic education. ISCED 2: lower secondary
    education or second stage of basic education.
 • Medium-educated comprises all the post compulsory education not tertiary (ISCED 3+4).
    ISCED 3: (upper) secondary education. ISCED 4: post-secondary non tertiary education


                                                                                             153
 • High-educated comprises all tertiary education including university education (ISCED
   5+6). ISCED 5: first stage of tertiary education). ISCED 6: second stage of tertiary
   education (leading to an advanced research qualification).

Low, medium, high skilled. In general this classification refers to the skills required for a
specific occupation that an employee currently holds. In existing taxonomies skills levels are
usually proxied by educational attainment (see low, medium, high educated).

Mobility, see job mobility.

Multi-skilling. Multi-skilling refers to training an employee to cover a range of different
jobs in one workplace. A multiskilled worker is an individual who possesses or acquires a
range of skills and knowledge and applies them to work tasks that may fall outside the
traditional boundaries of his or her original training. This does not necessarily mean that a
worker obtains or possesses high-level skills in multiple technology areas. However, the
worker can be an effective and productive contributor to the work output of several
traditional training disciplines.

Multi-tasking. The ability of a person to perform more than one task at the same time.

Profession. An occupation which requires knowledge gained through academic study, such
as law, medicine or teaching.

Qualification. Qualification refers to a formal outcome of an assessment and validation
process which is obtained hen a competent body determines that an individual has achieved
learning outcomes to given standards.

Qualifications, Comparability of -. The extent to which it is possible to establish
equivalence between the level and content of qualifications (certificates, diplomas or titles) at
sectoral, regional, national or international levels. (Cedefop, 2000)

Qualification, level of -. Low: at most lower secondary (ISCED 0-2); medium: upper
secondary (ISCED 3-4); high: Tertiary (ISCED 5-6).

Qualification framework. An instrument for the development and classification of
qualifications (e.g. at national or sectoral level) according to a set of criteria (e.g. using
descriptors) applicable to specified levels of learning outcomes. (OECD, 2007)

Retraining. Training enabling individuals to acquire new skills giving access either to a new
occupation or to new professional activities. (Cedefop, 2004)

Revealed Comparative Advantage (RCA). Relative comparative advantage compares the
relative contribution of sector x to the comparative advantage of the national economy with
other sectors. It is calculated as follows:

       RCA = tanh ( ln (( Exports S / Imports S ) / ( Exports C / Imports C ))) x 100

Interpretation: 0 = the comparative advantage of sector x equals the average of the
comparative advantage of the entire national economy. Near -100: the sector contributes
nothing to the comparative advantage of that country. Near + 100: the sector contributes
strongly to the comparative advantage of the country.



                                                                                             154
The use and logic of the country groupings winning, losing momentum, upcoming and
retreating in combination with revealed comparative advantage is similar to the concentration
index (see above).

Skills. Skills refer to the ability to apply knowledge and use know-how to complete tasks and
solve problems. In the context of the European Qualifications Framework, skills are
described as cognitive (involving the use of logical, intuitive and creative thinking) or
practical (involving manual dexterity and the use of methods, materials, tools and
instruments).

Skills gaps. Skills gaps arise where an employee does not fully meet the skills requirements
for a specific job function but is nevertheless hired. This skills gap needs to be closed through
training. Skills gaps can arise where new entrants to the labour market are hired and although
apparently trained and qualified for occupations still lack some of the skills required.

Skills needs, emergent -. Emergent skills needs are defined in this study as the change in
skills that is needed to adequately fulfil a certain job function in the future. Addressing
emergent skills is needed in order to avoid skills shortages and/or skills gaps in the future.

Skills shortages. Skills shortages exist where there is a genuine lack of adequately skilled
individuals available in the accessible labour market. A skill shortage arises when an
employer has a vacancy that is hard-to-fill because applicants lack the necessary skills,
qualifications or experience.

Tertiary education. Tertiary education refers, in most settings to non-compulsory education
provided via a specialist institution once secondary schooling is completed, usually labelled
as a college, polytechnic or university (in English) with variants of these in other languages.
Tertiary education may be delivered virtually or at a distance.

Trade balance. Exports minus imports.

Training. The development of skills or knowledge through instruction or practice; a kind of
vocational learning such as an apprenticeship or traineeship which includes both formal
education and on-the-job experience.

Unskilled work. Work which lacks specialist training or ability and generally involves
simple manual operations which can be learned in a short time.

Up-skilling. Short-term targeted training typically provided following initial education or
training, and aimed at supplementing, improving or updating knowledge, skills and/or
competences acquired during previous training. (Cedefop, 2004)

Vocational Education and Training (VET). Education and training which aims to equip
people with skills and competences that can be used on the labour market. (adapted from
ETF, 1997).




                                                                                             155

								
To top